KINIBIZ At the close of trade on Friday, water concessionaire Puncak Niaga Holdings’ stock was down six sen to RM3.35. At one point in morning trade, the company’s shares had hit as low as RM3.22.

Analysts attribute the negative sentiment to the announcement that talks between Puncak, the other water concessionaires, and the Selangor state government had hit a brick wall, with the federal government stepping in to buy over the water assets in Selangor.

The question now is - is the dip in Puncak’s stock warranted?

AmResearch’s water sector analyst said that the sell down was generally a knee-jerk reaction.

“Basically the expectation that the deal would go through was dashed,” he said.

Prior to the announcement, there was no indication that the talks had fallen through with both the water concessionaires and the state seemingly close to concluding the deal.

Nevertheless, the way Puncak clawed back to recover towards the midday close was an indication that the company still had its fair share of followers.

“Some investors still see value in Puncak, value in its oil and gas business,” the analyst from AmResearch said.

Puncak generally has two businesses - oil and gas, and water. Its water business is wholly-owned Puncak Niaga (M) Sdn Bhd (PNSB) which treats water, and 70 percent-controlled Syarikat Bekalan Air Selangor Sdn Bhd known as Syabas, which has the mandate to distribute treated water to Kuala Lumpur, Selangor and Putrajaya.

A fund manager from a foreign insurance outfit attributes the dip in Puncak’s stock to the situation of uncertainty surrounding the consolidation.

“Yes I know that Puncak is close to the federal government, and chances are Puncak will get its way, but there is still an element of uncertainty... I don’t know for certain what is going to happen.

“And think about it, since January last year Puncak’s stock is up some 180 percent, so why not exit,” he said when contacted.

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