Maybank IB Research expects the earnings impact to be immaterial, assuming a capex of around RM2bil and a single-digit internal rate of return.
PETALING JAYA: It remains unclear what the conditions are to deploy Tenaga Nasional Bhd
’s (TNB) recently announced RM16.267bil contingent capital expenditure (capex).
It is also unclear how the recovery mechanism would work and be funded, potentially from renewable energy exports, said Maybank Investment Bank (IB) Research.
TNB had clarified that the contingent capex was not included in the base tariff derivation.
Maybank IB Research said the demand growth assumptions are also pending.
Separately, TNB disclosed that it has been shortlisted under the large scale solar five programme to develop a 500MW solar farm in Kedah.
However, the research house expected the earnings impact to be immaterial, assuming a capex of around RM2bil and a single-digit internal rate of return.
Maybank IB Research maintained its earnings forecasts and target price of RM14 per share, pending further clarity on Regulatory Period 4 (RP4; 2025-2027).
It retained a “hold” recommendation on the stock.
On Dec 26, 2024, TNB announced a new base tariff of 45.62 sen per kilowatt hour (kWh) for RP4, up 14% from RP3 (39.95 sen per kWh).
The revised tariff schedule is still being finalised and is proposed to only take effect in the second half of 2025 (2H25).
Maybank IB Research highlighted that that the majority of the more than five sen per kWh base tariff increase is driven by higher fuel price assumptions, contributing roughly four sen per kWh, based on its estimates.
It said further clarity is required on the recovery mechanism and deployment conditions for the contingent capex.
The notable parameters from the RP4 base tariff included a coal price of US$97 per tonne (from US$79 per tonne in RP3).
The cumulative base capex stands at RM26.554bil (up from RM20.555bil), with a regulatory weighted average cost of capital of 7.3%, unchanged from RP3.
