-  The Edge Financial Daily reported today that Puncak Niaga Holdings Bhd is bidding for the waste-to-energy incinerator in Taman Beringin, Kepong. The project is said to cost ~RM800mil.

-  The daily quoted a source as saying that Puncak had submitted the bid in an international tender that was opened a few days ago. The tender is expected to close in three months.

-  Puncak is said to be looking to work closely with two foreign firms – a Japanese with the necessary expertise in the field and a French company.

-  So far, five bidders have submitted their proposal for the project. The winner of the project could secure a 30-year concession with the government.

-  The proposed project will be located next to the Taman Beringin solid waste transfer station. It will border Jinjang, Batu Caves, Selayang, and Segambut. The incinerator will be able to incinerate 1,000 tonnes of garbage daily.

-  Currently, there are five small-scale incinerators (<100 tonnes) in Pulau Langkawi, Pulau Tioman, Pulau Pangkor, Camerion Highlands and Labuan. Other incinerators are planned in Johor Bahru, Seremban, and Melaka.

-  We are not surprised with the news as Puncak Niaga is on the lookout of new business venture following the exit of its water concession business in Selangor.

-  The group is reported to be looking into venturing into the plantation business and would also likely spend part of its RM1.55bil proceeds to expand its oil & gas business.

-  Earlier this month, Puncak Niaga is reported to be shortlisted to supply water pipes to the Pengerang Integrated Complex worth about RM300mil.

-  We have not factored in the incinerator job into our model as it is still preliminary at this juncture. Note that the group is expected to sign a definitive agreement for the water sale, but new uncertainties have arisen following the political situation in Selangor. Maintain HOLD.

Source: AmeSecurities