- Puncak Niaga Holdings Bhd is among four parties shortlisted by Petronas for the supply of water pipes to the Pengerang Integrated Complex in Pengerang, The Edge Financial Daily reported today.

- Citing sources, the daily reported that the contract is worth about RM300mil.

- The other candidates are Ho Hup Construction Co Bhd, a joint venture between Salcon Bhd and George Kent (M) Bhd, and Loh & Loh Corp Bhd. The winner is expected to be announced soon.

- The daily quoted an executive that the bid could be for the engineering, procurement, construction and commissioning (EPCC) services for a water treatment plant (WTP).

- We are not surprised by the news as Puncak Niaga has been busy scouring for water-related construction jobs. The group has secured RM544mil worth of construction jobs this year.

- These include:- (i) D44 sewer pipe package worth RM394mil; (ii) a RM97mil job to build a WTP in Sarikei, Sarawak; and (iii) a water supply project worth RM53.4mil in Pakan, Sarawak.

- We believe Puncak Niaga stands a good chance to secure the Pengerang job given its expertise in the water-related construction business.

- Along with its oil & gas business, the construction arm would help to sustain its earnings as it exits the concessionaire business upon the state’s water restructuring exercise. The group is expected to sign a definitive agreement and hold an EGM within the next two months for shareholders’ approval.

- Parts of the RM1.55bil proceed from the water asset sale are expected to be utilised for its oil & gas business expansion, with the possibility of a venture into the plantation business. As such, we do not expect the entire proceeds to be dished out as special dividends to shareholders. Maintain HOLD.

Source: AmeSecurities