Further to the Edge Financial Daily report yesterday, the Energy, Green Technology  and  Water  Ministry  clarified  that  the  Federal  Government (FG)  is  not  giving  an  additional  RM3bn  to  the  Selangor  State Government  (SSG)  for  the  water  assets  takeover  under  the  Selangor water restructuring scheme. The ministry said that the FG is not giving an additional sum on top of the up to RM2bn it has already  committed for  the  RM9.65bn  to  take  over  the  water  assets  of  the  four concessionaires, i.e. PNSH, SYABAS, ABASS and SPLASH. (Source: The Edge Financial Daily)

Comment: With the clarification from the ministry, it is back to waiting for the outcome of the on-going negotiation with the FG on the fair value for SPLASH. We continue to believe that the shareholders of SPLASH will be able to negotiate a fair pricing for the concession. We maintain our ADD rating for Gamuda with an unchanged target price of RM5.30.

Source: Affin Hwang Capital Research - 7 Nov 2014