- We reiterate our BUY call on Tenaga Nasional (Tenaga),
with an unchanged DCF-derived fair value of RM8.15/share, which implies an
FY13F PE of 11x and a P/BV of 1.3x.
- Tenaga’s 50:50 joint-venture between its wholly-owned
REMACO and Kharafi National of Kuwait has secured an KD89mil (RM1bil) operation
and maintenance contract over 7 years for the Shuiaba North Co-Generation plant
located within the Shuaiba Industrial Authority Area, 40km from Kuwait city.
- The co-generation dual-fired (natural gas and distillate)
plant has the capacity to produce 780MW of electricity and 45mil gallons of
distilled water per day. The plant, commissioned in 2010, is owned by Kuwait’s
Ministry of Electricity & Water.
- We are not surprised that Tenaga has secured this contract
as management had stressed previously that the group intends to aggressively
expand its non-regulated revenues overseas.
- Assuming a pre-tax margin of 20%, we estimate that this
new contract will only contribute marginally to the group. Hence, we are mildly
positive on this development. But we continue to like Tenaga’s strategy to
increase the currently small proportion of its revenues away from regulatory
oversight.
- Meanwhile, Tenaga has signed three agreements with Samsung Engineering & Construction,
Siemens AG and TNB REMACO for the construction, 20-year service agreement and
operation and operations & maintenance contracts, respectively. The total value
of RM2.5bil is within the estimate that management had previously guided.
- We expect Tenaga’s 1QFY13 results, which will be announced
tomorrow, to be within expectations as coal prices are currently around
US$90/tonne, in line with our forecasts. While the stronger ringgit vs. US$ is
positive for Tenaga’s foreign debt exposure, we note that the currency
appreciation occurred only over the past 1 month after the 1QFY13 period.
- We continue to like Tenaga as the upcoming new power plant
capacities and ongoing tariff restructuring newsflow will underpin the stock’s
re-rating cycle. The stock currently trades at a P/BV of 1x, at the lower end
of the 1x-2.6x range over the past 5 years. Tenaga also offers an attractive
FY13F PE of 10x, compared with the stock’s three-year band of 9x-16x.
No comments:
Post a Comment