Saturday, 30 July 2016

Puncak Niaga - RM2.67 Net Cash Per Share Provides Huge Margin of Safety For RM1.08 Share Price


Author: Icon8888   |   Publish date: Mon, 18 Jul 2016, 03:41 PM

1. Huge Cash Pile Post Assets Disposal

Since I started blogging in 2014, I believe this will be the first time I make a Buy call based on Balance Sheets.

Puncak was previously the water concessionaire for the State of Selangor. It sold its water assets to the government in 2015 and received RM1.56 billion cash.

During the same year, it undertook a distribution of RM1.00 cash per share back to shareholders. Upon completion of the corporate exercise, it was left with cash of RM1.26 billion (comprises RM335 mil cash and RM927 mil short term investment).

Puncak has borrowings of RM57 mil. As such, net cash is about RM1.2 billion.

Based on 450 mil shares, that is equivalent to RM2.67 cash per share.



2. Historical Share Price

Since the completion of distribution of RM1.00 cash per share by end 2015, the stock has been trading at around RM1.00.




3. Proposed Acquisition of TRIplc

On 18 April 2016, Puncak announced that it has entered into Heads of Agreement to explore the possibility of acquiring the assets of TRIplc. This is a related party transaction as Tan Sri Rozali is the major shareholder of both Puncak and TRIplc.


Based on 66 mil shares and latest price of RM2.25, TRIplc's market cap is approximately RM150 mil.

TRIplc is the owner of government concession to provide facilities and infrastructure management for UiTM campuses. The concessions will last for more than 20 years. In the latest financial year, TRIplc reported net profit of RM7 mil.



4. Concluding Remarks

In my opinion, Puncak is undervalued at current price. The major risk investing in this stock is possible injection of assets by major shareholder at inflated value. However, at 60% discount to cash per share of RM2.67 and 70% discount to net asset per share of RM3.67, I believe the margin of safety is big enough to warrant a BUY.

Have a nice day.

3 comments:

  1. Hello Everybody,
    My name is Mrs Sharon Sim. I live in Singapore and i am a happy woman today? and i told my self that any lender that rescue my family from our poor situation, i will refer any person that is looking for loan to him, he gave me happiness to me and my family, i was in need of a loan of S$250,000.00 to start my life all over as i am a single mother with 3 kids I met this honest and GOD fearing man loan lender that help me with a loan of S$250,000.00 SG. Dollar, he is a GOD fearing man, if you are in need of loan and you will pay back the loan please contact him tell him that is Mrs Sharon, that refer you to him. contact Dr Purva Pius,via email:(urgentloan22@gmail.com) Thank you.

    BORROWERS APPLICATION DETAILS


    1. Name Of Applicant in Full:……..
    2. Telephone Numbers:……….
    3. Address and Location:…….
    4. Amount in request………..
    5. Repayment Period:………..
    6. Purpose Of Loan………….
    7. country…………………
    8. phone…………………..
    9. occupation………………
    10.age/sex…………………
    11.Monthly Income…………..
    12.Email……………..

    Regards.
    Managements
    Email Kindly Contact: urgentloan22@gmail.com

    ReplyDelete
  2. Are you in need of a loan? Do you want to pay off your bills? Do you want to be financially stable? All you have to do is to contact us for more information on how to get started and get the loan you desire. This offer is open to all that will be able to repay back in due time. Note-that repayment time frame is negotiable and at interest rate of 3% just email us creditloan11@gmail.com

    ReplyDelete
  3. eToro is the #1 forex broker for new and professional traders.

    ReplyDelete