Puncak Niaga Holdings Bhd (Aug 17, RM2.87)
Maintain hold at RM2.88 with target price RM2.61: Puncak Niaga yesterday entered into an agreement with India-based P&C Constructions (P) Ltd (P&C) to form an unincorporated joint venture in the name of PNHB-P&C Joint Venture (PPJV) to jointly participate in an international competitive tender for a pipeline conveyance system project in Mangalore, India.

The promoter of the project is Mangalore Special Economic Zone Ltd, set up in 2006 for the development of the Mangalore Special Economic Zone to boost economic growth in the area. Spanning a proposed 3,985 acres of land in the southwestern state of Karnataka, the MSEZ is a specifically delineated duty free enclave.

For the purposes of the tender, Puncak Niaga will be the lead partner with a 70% stake in PPJV, with the remaining 30% held by P&C. Preliminary talks are ongoing with P&C regarding the details of the tender, which opened yesterday. The project is given 13 months for completion, and we understand the project value is to be in the region of RM200 million to RM300 million. As the water infrastructure in the MSEZ is slated for completion by December 2011, we expect results of the tender to be made known by November 2010.

The project is in line with Puncak Niaga’s efforts to expand its presence in India. The company made its first foray into India in 2002, with Lanco Infratech Ltd and Kris Heavy Engineering & Construction Sdn Bhd for the Chennai Water Supply Project, which involved the supply and laying of 114km of steel pipes for RM234 million and a five-year operations and maintenance contract.

As the project is still in the preliminary stages, we make no changes to our estimates pending the outcome of the tender. We maintain our “hold” call and target price of RM2.61 based on one time NTA. — ECM Libra Investment Research