One of the more happening event that will finalize in the market will be the water restructuring exercise involving SPLASH, which is slated to be completed in the end of this month (July 2018) after a long series of delay.

The deal will go through, and all will be settled down in this coming 2 weeks. While all the minister involved are positive about resolving this water issue, the main question remains a big question mark - What is the value of SPLASH ?

So let's drill down on what is the potential valuation of SPLASH given it's water concession period that goes until 2030.

According to RHB Investment Bank, SPLASH is valued between RM 2.8 billion and RM 3.2 billion in 2015, and Deloitte reported the water assets at RM 3 billion.

Source taken from http://www.theedgemarkets.com/article/deadline-splash-takeover-extended-again

SPLASH Is a profit making company, that is approximate RM 300m net profit after tax. With concession agreement running until 2030, that is another 11.5 years to go. With the growth rate of water usage in Klang Valley continue to rise, that would probably see SPLASH profit going towards RM 350m to RM 400m in the next 10 years.

To make it easy, since SPLASH is a profit making company, and everyone need water to survive, every business also need water, this infrastructure is very steady, just like TNB supply electric and it is a neccessity.

If we put KPS valuation based on earning PE X 12, at earning capabilities of RM 300m per year, that is already value RM 3.6 billion.

There are some smart ass going around quoting some Tan Sri ridiculous offer of around RM 200m to RM 300m, which is pure nonsense.

The public and investor should be educated that Splash is not a play toy, and it is worth a mammoth RM 3.6 billion. Discount 10%, still got 3.24 billion.

As you know, KPS got 30% in SPLASH, so RM 3.24 billion x 30% = RM 972 million

At the current price of KPS which is RM 1.94, the total market capitalization is just merely over RM 1 billion. This figure is already equivalent to what you investor will be getting when SPLASH is finally sold to PAAB.

If you buy KPS now, means you are getting your investment back from a potential special dividend from the sale of SPLASH, and you will be getting free business

1. Packaging - century bond

2. Highway road builder and maintenance

3. EMS manufacturing service (Penang CPI)

4. Water pipe replacement 

If this is not a good deal, then what deal is good? Can you tell me?

Now is RM 1.94, soon no more share is going to sell below RM 2. If you are smart, you should do the smart thing, act the smart way.