Puncak Niaga announced on Bursa last Friday that it has revised the terms and conditions on its outstanding bonds after consulting its existing bondholders. This will result in an extension of time for the group to repay its debts. Maintain TRADING BUY, with our FV unchanged at RM2.00.

-  Restructuring its debt. Under the proposed debt restructuring, the redemption date for its RM1.0bn Bai Bithaman Ajil (BaIDs) secured serial primary bonds has been extended to 27 Oct 2016, instead of the existing annual redemptions on 27 Oct from 2011 to 2016. The selling price of the BaIDs has been lowered from RM1.5bn to RM1.3bn. At the same time, financial covenants have also been removed.

-  TRADING BUY. All in, we see this announcement as a slight positive to address Puncak Niaga’s debt repayment obligations given that the company has not been receiving full payment from Syarikat Bekalan Air Selangor SB (SYABAS). Maintain TRADING BUY call on the stock, with our FV unchanged at RM2.00 based on 3x FY13 P/E. We expect to hear more developments in Selangor’s water industry only after the 13th General Election, which is to be held in less than two weeks’ time from now.

Source: RHB