Puncak Niaga - Hit by Provisions, Higher Expenses

Puncak  Niaga  Holdings  (Puncak)’s  4QFY12  net  profit  of  RM12.2m  was  hit  by impairments  and  higher  water  treatment  expenditure  although  these  were  partially mitigated  by  liabilities  adjustment.  Still,  its  full-year  bottomline  was  impressive despite  coming  in  below  our  and  street  estimates,  thanks  to  a  higher  water  tariff compensation  and  its  O&G  contribution.  We  include  some  provisions  for  its  water distribution and treatment division as the ongoing water asset restructuring is likely to drag on, and hence trim our FY13/14 projections by 7.3%/8.4%. This lowers our FV to RM2.00, based on 3x FY13 EPS.  Trading BUY maintain.

Below  expectation.  Puncak’s  FY12  net  profit  of  RM237m  was  15.5%/16.2%  below OSK/consensus  estimates.  Its  4QFY12  results  included  the  impairment  of  compensation receivables  amounting  to  RM81.4m,  which  was  partially  offset by  a  RM58.6m adjustment in  its  long  term  liabilities  (both  net  of  deferred  tax).  That  said,  the company’s full  year results are still commendable,  reflecting a strong  rebound  from  a  barely-breakeven  2011. The  drastic  improvement  can  be  mainly  attributed  to  higher  water  tariff  compensation arising  from  the  scheduled  25%  tariff  hike,  which  should  have  been  gazetted  on  1  Jan
2012.  Apart from that, the group’s Oil & Gas (O&G) division continues to churn in striking numbers,  with  FY12  profit  before  interest  and  tax  (PBIT)  of  RM83.9m,  up  331.4%  y-o-y. Also, its construction division posted PBIT of RM11.5m in 4Q, a sharp recovery from 3Q.

Source: OSK