Wednesday May 14, 2008
Selangor water firms’ share prices rise
By LOONG TSE MIN
PETALING JAYA: The shares of Selangor's water-related companies that had been battered down post-election in March have begun to show signs of life in the past two trading days.
Kumpulan Perangsang Selangor Bhd (KPS), Puncak Niaga Holdings Bhd and Jaks Resources Bhd, which saw their share prices rise on Monday, advanced further on a spike in volume yesterday.
KPS gained 8 sen on Monday on 2.28 million shares traded and put on another 8 sen to RM1.96 yesterday on volume of 8.78 million shares.
Puncak gained 10 sen on Monday on 277,100 shares traded and added 10 sen to RM3.46 yesterday on volume of 956,100 shares.
Meanwhile, Jaks rose 1 sen on Monday with 5.8 million shares traded. It gained 2 sen yesterday to 77 sen with volume surging to 11.9 million shares.
Another Selangor-related water stock, Taliworks Corp Bhd, lost 1 sen on Monday on 38,000 shares traded but put on 5 sen to RM1.75 yesterday on volume of 434,600 shares.
An analyst told StarBiz one reason for the recovery of the counters could be that a resolution on water concessionaire issues between the Selangor state government and the federal government was in sight.
“Ultimately, come 2009, the Klang Valley will face water shortage. So everybody will have to work together to not let this happen,” he said.
However, he was not so bullish on the prospects of the re-nationalisation of the water concessionaires, saying: “They (the state government) do not have the money for that.”
AmResearch in a report on Monday on the water sector said the outcome for the tunnelling package of the Pahang-Selangor raw water transfer project would be finalised “very soon.”
Therefore, the research house believes there was greater urgency to kick-start Langat 2 as both the Pahang and Selangor portions have to run concurrently by next year.
“The new Selangor Mentri Besar has given the go-ahead for Kumpulan Darul Ehsan Bhd to commence the Langat 2 project,” AmResearch said.
The report, which maintained “buy” calls on KPS and Puncak, said with Langat 2, KPS was on the cusp of transforming into a leading water utility with a dominant 71% market share of the Klang Valley's water supply.
At the same time, the market should refocus on Puncak as the restructuring of the entire supply chain to re-nationalise water concession assets presented an excellent avenue for it to realise its deep embedded value, it said.
AmResearch also maintains a “buy” call on Jaks.
“Jaks remains in pole position to secure construction/pipeline works for phase 1 of Langat 2 worth RM2.5bil, given its status as the only integrated water engineering specialist capable of delivering large diameter pipes of 3m for raw water transfer,” the report pointed out.
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