May 24, 2011

PUNCAK - OSK holds trading 'buy' on Puncak Niaga

Stock Name: PUNCAK
Company Name: PUNCAK NIAGA HOLDINGS BHD
Research House: OSK

OSK Research is holding a trading "buy" recommendation for Puncak Niaga Holdings, although it secured a Sarawak contract
that lifts earnings estimates slightly.

Puncak Niaga announced that via a 40:60 joint venture with Quality Concrete Holdings, it had secured a contract worth RM667.32 from the Ministry of Rural and Regional Development.

The contract is for the supply, construction and commission of water supplies facilities for the rural areas in Sarawak for a period of 28 months.

"Though the addition has lifted our earnings estimates for Puncak slightly, we hold our trading buy recommendation for Puncak with its fair value at RM3.65 per share unchanged, based on historical book value," OSK said in a research note today.

OSK conservatively reckons the project commencement to be in June without any backdated revenue recognition.

The research house said although the project benefits the company as it has not secured a construction contract for some time, the marginal earnings increment to its bottom line, does not significantly raise its valuation. -- Bernama

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