- Puncak Niaga Holdings Bhd has signed a contract with the Government of Malaysia for a water supply project worth RM53.4mil in Pakan, Sarawak.

- The scope of works comprises:- (i) the supply, jointing and laying of delivery and pumping pipelines; (ii) construction and completion of three water reservoirs and three booster stations; and (iii) supply and installation of mechanical and electrical equipment including testing and commissioning.

- The contract will last for 21 months and is expected to be completed by Sept 2015.

- With this, the group has secured RM544mil worth of construction jobs this year.

- All in all, we are expecting Puncak Niaga to secure RM600mil worth of water-related construction jobs this year, with estimated pre-tax margins of ~7%.

- Recall that in Feb, the group secured the D44 sewer pipe package worth RM394mil. In May, the group secured a RM97mil job to build a water treatment plant in Sarikei, Sarawak.

- Meanwhile, we expected to reach a definitive agreement on the proposed RM1.55bil takeover of its 100% stake in Puncak Niaga Sdn Bhd (PNSB) and 70% stake in SYABAS in two to three months’ time.

- Following that, an EGM is expected to be called soon. Executive chairman and major shareholder Tan Sri Rozali Ismail (with a 41.3% stake) said that he intends to vote in favour of the offer.

- We believe that Puncak will likely utilise a portion of the proceeds to acquire new assets or venture into new businesses within the oil & gas industry.

- Maintain HOLD. 

Source: AmeSecurities