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| ECM positive on Puncak Niaga’s China JV |
| Written by Financial Daily | |||
| Friday, 25 September 2009 11:15 | |||
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The 80:20 JV, Hebei Sino Co Ltd, formed with Panlong Industrial Water Supply Co Ltd from Yuanshi county, will be involved in the treatment and distribution of water to industrial areas in Yuanshi, in the Hebei province. Puncak Niaga’s interest in the JV is via its 80%-owned Singapore incorporated unit, Sino Water Pte Ltd. However, on Puncak Niaga’s outlook, ECM Libra said the water rationalisation in Selangor, mainly the offer that is to be made to Syarikat Bekalan Air Selangor (Syabas) and Puncak Niaga Sdn Bhd, plays a more important role in the valuation of the group. “As such, we maintain our target price of RM3.66, based on our projected financial year ending Dec 31, 2009 net tangible assets per share,” it said. ECM’s projected FY09 price over net tangible asset for Puncak is 0.9 times. Meanwhile, the research house said the company’s China JV is in line with its plan to expand abroad. To recap, Puncak Niaga had signed a sale and purchase agreement with Global Environmental Solutions Ltd and a shareholders agreement with Environmental Holding Pte Ltd (EHPL) in May 2008, to acquire seven water and wastewater projects in China for S$12.4 million, or RM29 million. The acquired projects were to be injected into Sino Water Pte Ltd, an entity 80%-owned by Puncak Niaga and 20% owned by EHPL, ECM Libra said. It said at the time, it was stated that Puncak Niaga would be responsible for the management and operational matters of Sino, and that it would also assist Sino in obtaining financing for the business. “Since the first JV was to only have an impact on the group’s earnings about five years later, and there have been no details on the current JV, we have not taken into account any earnings impact from these projects,” the research house said. For FY09, the research house is projecting a net profit of RM173.8 million for Puncak Niaga, compared to RM24.6 million in FY08. It also projected an earnings per share (EPS) of 42.3 sen in FY09, versus six sen in FY08, and maintained a dividend per share projection of 10 sen. Puncak Niaga fell two sen to close at RM3.18 yesterday. This article appeared in The Edge Financial Daily, September 25, 2009.
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