Use a knife or scissors to pierce the "eye" on top of the coconut and drain out its water.
Add sugar to a heated pan over medium heat. When the sugar begins to melt, use a wooden spoon to spread the sugar to avoid clumping.
Once the sugar has melted, gently shake the pan in a circular motion. From this point onward, do not stir the sugar with the spoon, as doing so will cause it to solidify.
When the sugar darkens, lower the heat. As it simmers and bubbles, swirl the pan gently. Remove from heat and continue swirling until the sugar cools slightly.
Slowly pour the coconut water around the edges of the pan, avoiding the center. Return the pan to low heat and continue adding the remaining coconut water gradually.
Cook for about 1 minute. Gently stir the mixture.
Remove from heat, and allow the sauce to cool completely. Transfer it to a glass jar.