- Puncak Niaga Holdings Bhd has won a RM97mil contract from the Federal government to build a water treatment plant (WTP) in Sarikei, Sarawak.

- Puncak was appointed the contractor by the Ministry of Rural and Regional Development on Tuesday.

- The job scope comprises the construction, completion, testing and commissioning of a 30 million litres per day (MLD) WTP in Bayong, Sarikei.

- It also includes the construction of ancillary buildings and external works such as drainage, piping, manholes and sump pits, chemical ducts etc.

- The project will take 24 months with expected completion by 20 Oct 2015.

- We are not surprised with the award as the group is actively bidding for construction jobs this year. Earlier this year, the group has secured the D44 sewer pipe network construction job worth RM394mil.

- All in all, we are expecting Puncak to secure ~RM600mil of water-related construction job this year. Assuming EBITDA margins of 8%, the jobs are expected to contribute ~RM7mil to the bottom line this year.

- Meanwhile, the Federal and Selangor state governments are expected to sign a heads of agreement soon to facilitate the invocation of Section 114 of Water Services industry Act 2006 (WASIA) and the construction of Langat 2.

- According to reports, Langat 2 has already begun construction last week, following the appointment of Salcon MMCB AZRB JV Sdn Bhd as contractor of the WTP and reticulation system 2.

- Puncak Niaga chairman and major shareholder Tan Sri Rozali Ismail had also said that he did not object to the implementation of Section 114 of WASIA, but wants the investments put in by shareholders to be considered . Maintain HOLD. 

Source: AmeSecurities