- The press reported that the new Selangor Mentri Besar Mohamed Azmin Ali has asked for the full public disclosure of the documents pertaining to the water restructuring exercise in the state.

- Currently, the documents are under the Official Secrets Act (OSA) 1972.

- According to The Edge Financial Daily, Azmi said that he would write to the Federal government to demand for the contents of the signed water deal to be revealed.

- Yesterday, Azmin held a meeting with the State Economic Action Council in order to obtain clarity from Kumpulan Darul Ehsan Bhd (KDEB) and the state Economic Planning Unit on the steps taken since the master agreement was signed last month.

- Azmin also had urged for an open tender for the Langat 2 water treatment project.

- Recall that the master agreement was signed between the Federal and state governments, Pengurusan Aset Air Bhd (PAAB), and Pengurusan Air Selangor Sdn Bhd (PASSB) on 12 Sept. Three concessionaires – Syabas, Puncak Niaga Sdn Bhd (PNSB), and Konsortium Abass Sdn Bhd (K.Abass) – had accepted the state’s offer. SPLASH remains as the only concessionaire not to have accepted the offer.

- While a public disclosure of the documents may provide further clarity on the terms of the water deal that was inked, we opine that it would be difficult and unlikely that the terms could be changed.

- We expect the respective share sale agreements with the concessionaires that have accepted the offers to be announced soon. In particular, Puncak Niaga Holdings Bhd is expected to announce a definitive agreement before it calls for an extraordinary general meeting (EGM).

- As for SPLASH, we remain hopeful that a fair offer could be reached for a complete closure to the water saga. Recall that Gamuda Bhd, which owns a 40% stake in SPLASH, had noted that the offer of RM250.6mil was less than 10% of SPLASH’s NAV of RM2.54bil.

- As for Langat 2, we opine that works would continue given the water issues affecting the state. Real Estate and Housing Developers’ Association Malaysia (Rehda) told the press recently that 80% of property developers in Greater KL face difficulties in getting approval due to insufficient water. We maintain NEUTRAL.

Source: AmeSecurities