HLIB Research said the national utility giant’s UK unit is fast expanding its RE capacity.
PETALING JAYA: Tenaga Nasional Bhd
(TNB) is expected to expand its renewable energy (RE) assets in the United Kingdom and Europe through its wholly owned subsidiary Vantage RE Ltd.
According to Hong Leong Investment Bank (HLIB) Research, the national utility giant’s UK unit is fast expanding its RE capacity.
This is being done through acquisitions, brownfield development and greenfield development in the United Kingdom, and potentially into Europe.
“Today, Vantage has a portfolio capacity of 1.2 gigawatt (GW), which makes up about 27% of TNB’s total 4.4GW RE portfolio (including Malaysian RE), and Vantage is targeting to expand its capacity to more than two GW by 2030,” the brokerage wrote in its report following a recent site visit to Vantage.
TNB had been investing into RE in the United Kingdom since 2017.
It subsequently established a wholly owned subsidiary, Vantage RE, in 2021 as part of the group’s strategy to expand its overseas RE portfolio in Europe.
“Vantage plays an important part for TNB to diversify the group’s RE portfolio outside of its home base in Malaysia.
“Malaysia’s RE development is highly dependent on the Energy Commission’s (EC) decision making and Malaysia’s adoption rate for RE technology, posing delay risks to TNB’s ambitious plan to achieve net-zero emissions by 2050,” HLIB Research explained.
“On the other hand, the United Kingdom (and Europe) has a relatively more mature RE market with high acceptance and awareness among the public, as demonstrated by their high market share of RE generation,” it added.
HLIB Research maintained its “hold” call on TNB.
It has an unchanged target price of RM13.30 on the counter.
The research house said it was overall positive on Vantage in bolstering TNB’s commitment as well as that of Malaysia towards achieving net-zero 2050.
“In pursuit of net-zero emissions, management has also identified earnings growth opportunities,” it said.
However, it noted that TNB’s current share price had already priced in the potential earnings growth, while dividend yield had become relatively unattractive; hence it’s “hold” rating on the counter.
It said Vantage serves as an important platform for TNB to understand RE implementation and the structure of the power sector in more advanced countries like the United Kingdom.
“TNB aims to apply best-practice, technology, financing structure, know-how and regulatory reforms from the United Kingdom, to champion Malaysia’s aspiration in achieving net-zero emissions by 2050,” HLIB Research said.
“Vantage has facilitated a number of TNB’s secondment to support talent growth and knowledge transfer,” it added.
