Tuesday, April 9, 2013

KPS ... Apr13

It will be cash rich company – provided the water restructuring exercise proposed by the Pakatan Rakyat state government goes through.

KPS will receive about rm154 million cash from KDEB for its equity stake in SPLASH and 90.83% stake in Titisan Modal Sdn Bhd which in turn owns 100% of Konsortium ABASS Sdn Bhd.

KDEB will also pay rm251 million cash for SPLASH’s equity and rm86.2 million cash for Titisan Modal’s equity, and at the same time assume SPLASH’s water assets and liabilities at a consideration of rm1.58 billion and those of Titisan Modal at rm906 million.

Besides the offer to sell its water assets, KPS is also set to receive rm194 million cash from KDEB for disposing of its 56.57% stake in KHSB. The deal is part of the state government’s effort to streaming the activities of its development agencies.

Market observers say if BN manages to win back Selangor, the water deal put together by the incumbent state government will be in limbo. If the status quo remains, the water deal is likely to go through.

KPS has net total borrowings of rm1.18 billion as at Dec 31 2013 of which rm914 million are long term. Most of its borrowings are debts associated with the water assets, especially those at ABASS which will be assumed by KDEB if the deal materializes.

In total, KPS will receive cash of rm347 million if the sale of its water assets and KHSB goes through. With the disposals, its total cash and bank balances will likely increase to about rm420 million considering its cash holdings of some rm73 million as at Dec 31 2012. The company could receive more cash when federal government unit PAAB decides on the payment of surplus book value of assets over liabilities to applicable concessionaires.

KPS’ current (early 2013) price does not fully reflect the cash amount from the disposal of the water assets.

Regardless of the outcome of the water deal, KPS will still have the rm194 million cash from the disposal of its stake in KHSB to KDEB. Part of the cash will be utilized to buy out the members of Perangsang Templer Glof Club.

It plans to redevelop the 78.9ha golf course in Gombak into a mixed development project with a GDV of rm1.25 billion.

The cash could come in handy for KPS to fund its new ventures.

In June 2012, its unit acquired a 30% stake in Ceres Telecom Sdn Bhd for rm24.24 million as part of its expansion into the mobile telcos industry.

In 2012 it also acquired a 40% stake in NGC Energy Sdn Bhd for rm40 million cash. NGC Energy acquired Shell’s LPG distribution business from Shell Malaysia Trading Sdn Bhd for an undisclosed amount. KPS acts as a NGC’s bumiputera partners to undertake the business in peninsular Malaysia.

KPs may also benefit from Pakatan Rakyat’s pledge to take over toll concessionaires if it comes into power at the federal level. The company owns a 20% stake Sistem Penyurian Trafik KL Barat Holdings Sdn Bhd, the concessionaire of the SPRINT highway in the Klang Valley.

Whatever the outcome of the 13GE, it almost certain that KPS will venture into new areas such as telecommunications and LPG distribution It remains to be seen if these will prove successful.


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