Posted by hng33 > 2014-10-22 13:10 | Report Abuse

sunztzhe

In order to reduce NRW, it need pipe replacement and good tracking system to detect leaking site. It need capex at least another RM 1 bil, in another 2-3 year to complete, in order to reduce NRW from current 36% to target 20%. It is almost impossible to get ride of NWR at all, the target 20% is in par with Penang PBA record.

In order to manage state water assets efficiently, from increase raw water supply to the dam by channeling water fro rain catchment area, manage treatment plant, distribution, detect leakage to collecting revenue from customer, it is best lie on well manage, record proven companay like splash to co-manage with State government.

In 2000, poor management, inefficient of state run company are the main reason state to privatize water asset under concession agreement to splash, Abbass, Puncak (PNSB and syabas). Out of the four concession, State only voice out dissatisfaction with Puncak service, especially its syabas unit for its inability to reduce NWR.

Posted by sunztzhe > 2014-10-22 13:28 | Report Abuse

hng33,
Thanks for the info on NRW loss to minimum 20%. So the NRW saved is say 550 MLD which is almost one new water treatment plant capacity in Langat 2@ 565 MLD per treatment plant.

The best option which relies on working with a party with proven track record and which also does not require any further invested capital from Selangor state government is to do a JV with SPLASH to co-manage the water assets and bring this long impasse to an end and get on with the job of reducing NRW to 20% whilst working with FED to fast track the Langat 2 Phase 1.

If this option materializes, one should be fully invested in KPS.

Posted by hng33 > 2014-10-22 13:57 | Report Abuse

Again, I want to stress here, it is free market, everyone free to trade base on own discretion right in investment. Forum here mean for everyone to share information, share thought of view, but ultimate decision making rely on own, bear own risk and reward.

Posted by moisking > 2014-10-22 15:51 |

Post removed.Why?

Posted by hng33 > 2014-10-22 16:21 | Report Abuse

sunztzhe

scenarios 1:

Splash retain concession until end of next 16 year, KPS via 30% stake in splash continue record associate net earning about RM 75m/pa or EPS= 15sen consistently.

This is based on current KPS earning profile, most of its 91% stake Abbass profit offset by interest expense. KPS current interest bearing borrowing is about RM 1 bil, but most of them will assume by PAAB if KPS opt for take over. KPS will also get about RM75 net cash from Abbass disposal + KPS exiting cash hoard about RM 185m, totally KPS net cash after divestment Abbass about RM 260m or 52sen/share.

Other KPS business contribution is negligible at the moment, oil and gas turn some profit, but mostly offset by telco loss; Hotel shah alam under refurbishment to turn into corporate office; 20% sprint highway still unable to deliver dividend at least until after 2017; Nevertheless, KPS JV with SP setia to redevelop its Golf course at least ensure RM 200m net profit over the development period.

If all business assets other than water is to value based on their cost investment and book value,

1. Oil and Gas: RM 40m
2. Telco: RM 30m
3. Hotel shah Alam + Hotel KL + KPS tower = RM 150m
4. Sprint Highway 20% = RM 128m
5. Golf course redevelopment profit: RM 200m

KPS total assets is worth another RM 1.10/share


In short, under scenario 1: KPS able to continue deliver at least EPS 15sen over next 16 year base solely on 30% associate splash profit + retain cash hoard = 52sen/share + back by solid other assets = RM 1.10. therefore, KPS sum of value become

KPS SOP
1. Splash value at 10x PE = RM 750m
2. Cash hoard = RM 260m
3. Other asset: RM 548m

Total: RM 1.558 bil or RM 3.12


scenarios 2:

State revert back to 2009 offer price, value splash based on net book value. Splash offer could potential value at RM 1.56bil (net book value at 2009) or RM 2.5 bil (net book value 2013). KPS 30% stake potentially value at RM468m or RM 750, worth net cash 94sen/share to RM 1.50. If take into account Abbass divestment and exiting cash hoard of RM 260m, KPS net cash position range RM 1.46 - RM 2.02/share

KPS SOP
1. Divestment for 30% Splash = RM 468m - RM 750m
2. Cash hoard = RM 260m
3. Other asset: RM 548m

In short, under scenario 2: KPS will unable to continue deliver EPS due to loss in core business but able retain huge cash hoard range RM 728m - RM 1.01 bil (RM 1.46 - RM 2.02/share) + back by solid other assets = RM 1.10. therefore, KPS sum of value become

Total: RM 1.276 bil - RM 1.558 bil or RM 2.56-3.12

Posted by sunztzhe > 2014-10-22 16:57 | Report Abuse

hng33,
Thanks for valuation on the two scenarios.
There is however a third scenario and that is the state govt JV with SPLASH. SPLASH takes over management of all water treatment, distribution and maintenance assets and SPLASH in future is listed on BURSA.

So using the same datas, the volume of treated water from SPLASH will increase to 4,175 MLD from 2,000 MLD in the initial years. KPS EPS will easily double to 30 cents assuming efficient cost structure is realized by SPLASH management quickly, KPS will register minimum RM 150 million earnings per year

KPS SOP
1. Splash value at 10x PE = RM 1,500m
2. Cash hoard = RM 260m
3. Other asset: RM 548m

Total: RM 2.308 bil or RM 4.625/share

Remarks: This will be the best scenario for KPS as its current share of RM 1.49 price will be very undervalued and if KPS declares a dividend policy of paying about 30% to 50% of its Earnings as dividends, KPS shareholders can look for ward to a future dividend payment of 9 cents to 15 cents per share. Moreover KPS shareholders will benefit from the future listing of SPLASH on BURSA.

How will the Langat 2 situation pans out in this scenario 3?

Posted by Wiwangwang > 2014-10-22 17:24 | Report Abuse

Mr goh dan encik k is last chance for u to grab this kps at lowest price ... I worry u all can't wait this share go to 1.40 it already go to 2.50 .. Haha .. Anyway I bought dy ..huart ar .. Go go go up n up ar...

Posted by hng33 > 2014-10-22 17:43 | Report Abuse

sunztzhe

Scenarios 3 is possible mainly due to the fact that Gamuda in 2010 (25 Mar 2010) indeed through its 40% in splash proposed to take over all water assets for RM 10.75 bil. Gamuda also proposed to reduce NRW to below 20% in 3 year, and ensure water traffic hike only in every 3 year, less than 9% to keep in par with inflation rate, but splash concession need to extent up to 30year.

However, since State decide to own power in water assets which is major reason State want to consolidate water asset in exchange for Langat 2 phase 1 with Fed gov. Therefore, Splash now may opt to corporate with State to co-own and co-manage water assets.

Depending on valuation, State can opt inject PNSB, 70% syabas, Abbass and upcoming langat 2 into splash in exchange for 60% enlarge stake in splash, Gamuda stake in enlarge splash will dilute into 16%, KPS 12%, Wan Azmi 12%. After that, splash can seek bursa listing, in which State can pare down own-ship by distribute half of its stake to co-share with all Selangorean, either free or restricted IPO offer. In short, State gov will be major shareholder of splash 30%, Gamuda 16%, KPS 12%, Wan Azmi 12%, Selangorean 30%

Remark: State effective stake in enlarge splash will be higher if take into account State 57% control KPS. Alternatively, State can opt to privatize KPS first to directly own 91% Abbass and KPS 30% in splash first before inject PNSB and 70% syabas into enlarge splash for higher equity stake.

All in all, State can retain major shareholder in water assets but manage by efficient and well manage splash and all Selangorean can co-own state water assets through restricted IPO listing.

Posted by sunztzhe > 2014-10-22 18:28 | Report Abuse

hng33, Thanks for your input. Looking at the possible future pan out, Gamuda may even opt to sell its 40% stake in SPLASH directly to KDEB as Gamuda being a public listed company may not be keen to end up being a minority partner in the enlarged water entity

Posted by hng33 > 2014-10-22 19:29 | Report Abuse

sunztzhe

Gamuda keen to expand its infrastructure concession base business such as recent acquisition in KESAS highway 70% and co-own now with State PKNS 30%. Gamuda also own 50% stake in listing Litrak which control LDP and 50% stake in sprint. Gamuda also itself directly own 30% stake in sprint together with state own KPS 20%.

Therefore, Gamuda and Selangor state gov co-own many infrastructure assets. It could Gamuda acquire all remaining stake in splash from KPS 30% and Wan Azmi 30%, in order to wholly own 100% splash first. After that, it allow State inject PNSB, Abbass, syabas, Langat 2 (phase 1) in exchange for equity stake, resulting enlarge splash is co-own by State 60% and Gamuda retain 40% stake.

If splash opt for future listing, both state and Gamuda can pare down their stake, such as state pare down by 20% by offering restricted IPO to Selangorean, and Gamuda pare down by 5% by offering share to public. In short, after listing, enlarge splash will co-own by State 40%, Gamuda 35% and Selangorean + public hold 25%

Whatsoever, there are plenty of choice if state opt to co-own and co-manage with Gamuda in enlarge splash to manage all water assets under one roof

Posted by sunztzhe > 2014-10-22 19:37 | Report Abuse

hngg33,
So a KPS shareholder who buys in at current level faces possibility of any one of the few scenarios happening in the future and a basic financial analysis of each possible scenario augurs well for its future stock price valuation.

Posted by hng33 > 2014-10-22 20:46 | Report Abuse

sunztzhe

Share price can't move just based on fundamental analysis alone, but knowing stock intrinsic value at least give investor margin of safety.

Market sentiment, supply and demand, global market, technical chart analysis, political movement, definitive agreement to seal the deal etc all aside fundamental, contribute different degree of impact on everyday share price movement.

Therefore, stay invested if stock carry higher intrinsic value than share price, and in fact, KPS investor no need to stay long as Fed gov already pushing State to sign definitive agreement with water concession (Puncak unit, PNSB + syabas + Abbass) in exchange to commence work on Langat 2 (phase 1).


MB can still query high cost Langat 2, such as too high specification/cost maintenance etc, demanding disclosure to public in order to pressure Fed to change Langat high cost specification. But, I doubt it going to further delay since MOU and HOA already signed between State and Fed gov to exchange deal between PNSB + Syabas + Abbass with Langat 2 (phase 1). All MB can do, is proceed with the current deal, but able to renegotiate with Fed in exchange deal between splash with Langat 2 (phase 2)

Posted by jolie2 > 2014-10-22 20:53 | Report Abuse

The deal won't be an easy deal. PKR would want the deal to delay further.

http://www.themalaysianinsider.com/malaysia/article/selangor-overpaying-rm2-billion-for-water-deal-amounts-to-bailout-for-punca

Posted by jinny > 2014-10-22 22:22 | Report Abuse

Yes .. Not only delay .. Kps will fall to 0.90 cents .. Waiting ..

Posted by sunztzhe > 2014-10-23 08:43 | Report Abuse

hng33,
Phase 2 Langat 2 (760 MLD) will be after completion of phase 1( 1,130 MLD in 2017 or later). In view of this the most likely short to medium term scenario is scenario 1 where the state govt will consolidate Puncak, Abbas, Syabas to reduce NRW to 20% which will yield savings of 500-550 MLD and this requires capital outlay of about RM 1.00 billion and thereafter followed possibly by scenario 3. I do not see scenario 2 happening as it requires too much capital investment upfront. The state govt will focus on consolidating Puncak, Abbas,Syabas and reduce NRW from 33% to 20%. Based on scenario 1 SOP valuation the intrinsic worth of KPS is RM 3.12

Posted by hng33 > 2014-10-23 08:46 | Report Abuse

Agreed

Posted by hng33 > 2014-10-23 08:55 | Report Abuse

jinny

I can see some buyer waiting to buy at 1.07-1.08 in odd lots screen, but still cannot see anyone q to buy at 90sen le.......

Posted by sunztzhe > 2014-10-23 09:00 | Report Abuse

hng33,
Assuming Langat 2 Phase 1 is completed on time by 2017 and Selangor state govt invest RM 1 billion to reduce NRW to 20%(saving of say 500 MLD) by 2017, there will be additional supply of 500 MLD(NRW saved) + 1,130 MLD(Langat 2 Phase 1 supply)= 1,630 MLD which the state govt has to find new users by 2017. That means the Selangor state govt will focus its effort to attract new users by 2017 as it has to start earning $$$$ to pay off the investments.

Meanwhile there will be ongoing negotiation with FED for lower price of Langat 2 Phase 2 as the price savings from Langat 2 Phase 2 will be used to takeover SPLASH or do JV with SPLASH for an eventual SPLASH listing in BURSA in the future.

Posted by Stockman > 2014-10-23 09:06 | Report Abuse

Water deal is on for better flow

Posted by hng33 > 2014-10-23 09:08 | Report Abuse

sunztzhe

There is need to prepare more treated water to increase margin of reserve to meet future growing demand as it cover vast, dense area and industrial state (Putrajaya + KL, Selangor). Therefore, state gov invest in water will be well pay off in future

Posted by sunztzhe > 2014-10-23 09:14 | Report Abuse

hng33,
Water is ALWAYS an evergreen business especially in a growing GDP per capita state like Selangor which has KL, Putrajaya. Once the business community is confident that there will be ample supply and there will be no future supply disruption, the economic takeoff in Selangor will be tremendous and I wont be surprised that Langat 2 Phase 2 may even be fast tracked.

Posted by hng33 > 2014-10-23 09:21 | Report Abuse

Agreed, all water treatment concession (splash, PNSB and Abbass) all record at least 50% profit margin. Only the syabas, in charge of distribution incur loss due to high NRW, high cost for pipe replacement, poor management, unable to secure water traffic hike etc.

Treated water is essential life item, On the other hand, raw water is source naturally at no cost, therefore, company involve in water industry is recession proof.

Posted by Wiwangwang > 2014-10-23 09:32 | Report Abuse

Ok . . Good jinny u keep on wait the price go to 90cent . Last chance after broke this low level .. Kps share price will go very high . .. Hng33 n sunztzhe what the target price for kps ?

Posted by hng33 > 2014-10-23 09:45 | Report Abuse

Wiwangwang

Target price !!?? I'm not analyst from investment bank ler... but you can refer to KPS intrinsic value based on previous posting on various scenario, then take own sweet time to set own target price, after all, one should responsible own discretion choice.

Posted by Wiwangwang > 2014-10-23 09:53 | Report Abuse

Haha . Ok . Hng congratulations . u start making money on this kps stock dy . But today still got ppl willing to cheap sell their share . Because new MB say that he hope the deal will complete ASAP .. I think now the problem is on construction company . Mayb reduce the construction cost .

Posted by hng33 > 2014-10-23 09:54 | Report Abuse

Water deal stays but make terms public, says Azmin

Selangor Menteri Besar Mohamed Azmin Ali will not revoke the water agreement between the state and Putrajaya, The Star reported today.

In an exclusive interview, the daily quoted Azmin as saying he wanted to see a more efficient and quality water supply in Selangor.

"I am not going to revoke the deal, I want the exercise to be completed as soon as possible so that the people can have enough water."

However, he said he would pressure Putrajaya for full disclosure of the water deal, which also includes the construction of the Langat 2 water treatment plant.

"I cannot defend the decisions taken for the water deal if I cannot give an explanation to the rakyat about the terms and conditions of the agreement," Azmin told The Star.

The agreement, which Azmin's predecessor Tan Sri Abdul Khalid Ibrahim signed with Putrajaya, has been classified under the Official Secrets Act 1972.

Since taking office, Azmin has said several times that he would request the federal government for a full disclosure on the grounds of public interest.

On Monday, he asked Attorney-General Tan S‎ri Abdul Gani Patail to explain why Putrajaya refused to declassify the water restructuring agreement.

Azmin said his staff had yet to receive an official letter from the Energy, Green Technology and Water Ministry, and wanted reasons stated in writing as to why his request was rejected before taking further action.

"The federal government must explain why it was rejected since this agreement is not an issue of national security.

"It is only a business contract between two parties, why must it be hidden?" he said as quoted by The Star.

Azmin also told the paper that he did not intend to be a "stingy" MB as his predecessor Khalid was reputed to be.

"This is not my money, it belongs to the rakyat so it has to be spent wisely," he said, referring to the RM3 billion surplus in Selangor's accounts.

Azmin said he intended to spend on infrastructure maintenance and cleanliness in Selangor.

"Selangor receives about RM500 million annually from Putrajaya to maintain roads and other basic infrastructure," Azmin revealed to The Star.

However, under Khalid, only 50% or RM250 million was channeled to local councils with the balance going into state reserves.

"From 2015, every single cent from Putrajaya must go to the local councils to maintain their areas," Azmin said. – October 23, 2014.

Posted by jolie2 > 2014-10-23 10:20 | Report Abuse

water deal stays but don't know when to close the deals. No target date to close. Suka-suka anytime.
Maybe wait for another year ?

Posted by jinny > 2014-10-23 13:07 | Report Abuse

Jolie2 just read the star that's a interview of MB . He say want to complete the water deal as soon as possible . . I think can't get kps at 90cent ..

Posted by jolie2 > 2014-10-23 14:18 | Report Abuse

Man-man lai.
Let me check with my fortune teller first.
His prediction very chun one.

Posted by arvin6 > 2014-10-23 15:45 | Report Abuse

Today all company related to selangor water restructuring deal also start moving ... Is it mean everything is done ? But I only know that gamuda is very stabil to move up .. Kps price still low . . I think will bought some kps before it go up ..

Posted by leonard72 > 2014-10-23 23:11 | Report Abuse

wow, first time I hear people buy stocks based on fortune teller....if wrong, just blame the fortune teller :P

Posted by moisking > 2014-10-23 23:14 |

Post removed.Why?

Posted by arvin6 > 2014-10-24 10:06 | Report Abuse

Yes .. WIWANGWANG what u say is correct . This is the last chance for those to buy this kps at lowest price . Thanks hng33 n sunztzhe share the info ..

Posted by hng33 > 2014-10-24 10:11 | Report Abuse

Welcome :)

Posted by samsoongyc > 2014-10-24 10:23 | Report Abuse

Time n fortune waits for no man for the matter woman also . I think I flip coin better than to wait for fortune teller prediction . 80% accurate haha...

Posted by jinny > 2014-10-24 11:10 | Report Abuse

Erm look like kps will go down . . I'm not waiting kps go to 90cent . Will buy kps below 1.50 ..

Posted by joeylee > 2014-10-24 16:35 | Report Abuse

Look like dow jones is forming a downside head and shoulder in 4 hours. Panic..

Posted by hng33 > 2014-10-24 16:42 | Report Abuse

1.58 already

Posted by samsoongyc > 2014-10-24 17:25 | Report Abuse

People who panic shouldn't get into stock market can hav nervous breakdown......

Posted by Roger123 > 2014-10-24 19:08 | Report Abuse

Well done hng33

Posted by Roger123 > 2014-10-24 19:08 | Report Abuse

I queued at 1.45
but cant get

Posted by Wee Shiong Cheong > 2014-10-24 21:34 | Report Abuse

jinny, wait long long lah 0.90, this song give u: http://m.youtube.com/watch?v=uc2UEfWjvo8

Posted by sunztzhe > 2014-10-24 21:49 | Report Abuse

Those who wait for 90 cents will not buy at these price levels as their ego had told them or to be more precise "their egos had conn them to wait for 90 cents". These people had no idea of what is the intrinsic worth of KPS and being momentum players .. will most likely jump in when stock price cross RM 1.80

Posted by Roger123 > 2014-10-24 21:57 | Report Abuse

sunztzhe: I have been following this stock more than 7 years during dtk karim time

Posted by Roger123 > 2014-10-24 22:01 | Report Abuse

I know the intrinsic value of kps more than others, but it was sold off by kali- eg taliwork, jaks and khsb

Posted by sunztzhe > 2014-10-24 22:01 | Report Abuse

Those who wait for 90 cents will not buy at these price levels as their ego had told them or to be more precise "their egos had conn them to wait for 90 cents". 90 cents target has nothing to do with the intrinsic valuation of KPS. It is just a TA price level which their ego thinks the price will drop down to. These people think that TA is GOD, TA can indeed have predictive power but didn't understand the basic principle of TA. TA merely capture past price datas, volume datas etc. It can give indicative price support levels, price resistance levels, trend indication but it cannot predict the future price action.

The future price action is determined by FA and FA catalysts. In essence FA is the DRIVER OF PRICE, TA is just a PASSENGER IN THE CAR. The passenger just record what the car is doing.

These people had no idea of how to do basic intrinsic valuation or what is the intrinsic worth of KPS and being momentum players .. will most likely jump in when stock price cross RM 1.80

Posted by Roger123 > 2014-10-24 22:02 | Report Abuse

wat dtk karim did for kps last time, was all ruined by kali.

Posted by Roger123 > 2014-10-24 22:03 | Report Abuse

sold taliwork and jaks at loss
sold khsb at a very cheap price

Posted by Roger123 > 2014-10-24 22:04 | Report Abuse

The intrinsic value left nothing if the water is gone

Posted by sunztzhe > 2014-10-24 22:07 | Report Abuse

hng33 had already indicated a reasonable intrinsic SOP valuation for different scenarios . Just go back to the previous threads if that is of interest to any one of you.