KUALA LUMPUR: CIMB Equities Research has ceased coverage of Puncak Niaga Holdings Bhd as the company faces the risk of prolonged losses from existing operations.

The research house said on Thursday Puncak Niaga’s main business segments of construction and oil & gas are facing challenges due to depleting order book, rising costs and subdued oil & gas outlook

“A turnaround driven by potential new M&As is likely to take a longer timeframe. Our previous forecasts, valuations and recommendation should no longer be relied upon for further investment decisions. Our last recommendation was Hold,” it advised investors.

Since Puncak’s exit from the water industry in Selangor via the sale of its two water concessions, PNSB and SYABAS, to Air Selangor for RM1.6bil in October 2015, its earnings prospects have been challenging. 

CIMB Research cautioned that at this juncture, it appears that a business turnaround via potential new M&As will likely take a longer timeframe. 

Recently, Puncak, though a JV, proposed to acquire a still-loss making Sarawak Plantation outfit, Danum Sinar, for RM447mil (effective JV share of RM268mil). 

Separately, the heads of agreement (HOA) to acquire TRIplc has been extended to Feb 2017. It remains to be seen if the proposed takeover structure is sufficient to mitigate Puncak Niaga’s existing operating losses.