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Research firms upbeat on TNB despite uncertain GenCo IPO timeline

17/08/2022 12:18 PM

KUALA LUMPUR, Aug 17 (Bernama) -- Research firms remain upbeat on Tenaga Nasional Bhd although the initial public offering (IPO) of its subsidiary, TNB Power Generation Sdn Bhd (GenCo), might not materialise in the near-term 

CGS-CIMB Securities Sdn Bhd said based on information gathered during Investor Day held yesterday, GenCo will evolve into a cleaner electricity generator through early retirement of selected coal plants, repowering retired generating facilities with cleaner fuel and new green tech options, and strategic partnerships.

It said GenCo’s IPO would not likely happen in the next two to three years as TNB is focusing on improving efficiencies of its existing assets and decarbonisation.

 “We like TNB as it will likely keep its monopoly position in the electricity transmission and distribution segment and it has decent dividend yields of more than five per cent for financial year 2022-2024 (forecast).

“(TNB also) is poised to benefit from Malaysia’s energy transition such as additional grid investments and renewable energy opportunities, which could boost earnings and improve public environmental, social, and governance (ESG) perception of TNB,” the stockbroking firm said in a note today.

CGS-CIMB has kept its ‘Add’ recommendation with an unchanged target price (TP) of RM13.30 per share.

Meanwhile, Public Investment Bank Bhd said TNB aimed to reduce 35 per cent of its greenhouse gas emission intensity and reduce 50 per cent of its coal capacity by 2035 -- the ultimate goal is to become coal-free by as early as 2050.

All in, TNB aspires to grow its earnings before interest and tax by about 140 per cent to RM19 billion while bringing its carbon emissions intensity to zero by 2050, underpinned by future generation sources, new green business and grid of the future, it said.

“Expenditure is estimated to be around RM10-20 billion yearly over the next 30 years.

“All told, no changes to our earnings estimates and maintain our 'Outperform' call with an unchanged TP of RM12.42,” it said.

As at 11.45 am, TNB shares on Bursa Malaysia rose four sen to RM8.93 with 1.04 million shares changing hands.


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