KENANGA MAINTAINS 'OUTPERFORM' CALL ON YINSON

KUALA LUMPUR, March 4 -- Kenanga Investment Bank Bhd has maintained its “outperform” call on Yinson Holdings Bhd with target price of RM6.95, as the group secured a INR27.5 billion (about RM1.5 billion) contract in Nokh Solar Park in Rajasthan, India.

The investment bank said it was positive on the contract, reaffirming Yinson’s commitment to its renewable energy expansion, with this being its second solar project in India.

Yinson has secured a 25-year solar power purchase agreement (PPA) in Nokh Solar Park in Rajasthan, India through its 80 per cent-owned subsidiary, Rising Sun Energy (K) Pvt Ltd, with a contract value of INR27.5 billion based on INR2.25 per kilowatt hour (kWh).

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“This will also be another step towards the group’s mid-term ambitions of reaching 1.0 gigawatt (GW) of renewable energy in two years, and long-term target of 5GW in five years.

“The plant is also Yinson’s second project in renewable energy, after the first aforementioned 140 megavolts (MV) plant, also in India, giving Yinson a total of 330MV solar production capacity to date,” Kenanga Investment Bank said in a research note on Thursday.

Comparatively, Kenanga Investment Bank said it was notable that the tariffs (for the new PPA) would be significantly lower at INR2.25 per KWH than its first solar project at INR4.35 per kWh even though the project was initially awarded four to five years ago.

Meanwhile, Maybank Investment Bank Bhd (Maybank IB) said based on its estimates, the project would generate earnings before interest, taxes, depreciation, and amortisation of RM56 million and net profit of between RM11 million and RM27 million per annum from 2022 and 2047.

 “Our estimates are based on the assumptions of RM400 million capital expenditure, 75:25 debt-equity financing for 18 years at 8.2 per cent,16 per cent tax rate, and an 80 per cent stake, respectively.

“That translates into net present value of RM85 million, which is relatively similar to its first solar project Bhadla Solar Park,” said Maybank IB. 

At 11.33am, Yinson rose seven sen to RM5.37, with 820,700 shares changing hands.

-- BERNAMA