Last Friday, the federal and Selangor governments signed a supplemental agreement on the state's water restructuring plan ending an impasse that has  dragged  on  since  2008.  The  parties  involved  in  the  supplemental agreement have an extended 60 days from Friday to complete the master agreement. Among the conditions laid out in the supplemental agreement was to allow the water restructuring exercise to proceed without Selangor giving up its land while still complying with the requirements of the Water Services  Industry  Act  2006.  There  are  however  still  outstanding  issues related  to  the  delayed  Langat  2  project  (which  sources  raw  water  from Pahang) and the ongoing negotiations to take over the water assets held by Syarikat Pengeluar Air Sungai Selangor Holdings Bhd (Splash), which owns the biggest water treatment plant. (Source: Financial Daily)

Comments:  We  are  positive  on  this  development,  which  would  help remove  much  of  the  uncertainty  surrounding  Puncak’s  water  asset disposal. We maintain our Buy rating on Puncak with an unchanged TP of RM2.90.  Our  TP  of  RM2.90  is  pegged  to  the  existing  Selangor Government’s  offer  price  and  we  conservatively  do  not  ascribe  any valuation to the O&G business due to industry headwinds.

Source: Affin Hwang Capital Research - 13 Jul 2015