Investment Highlights

• We maintain BUY on Tenaga Nasional (TNB) with an unchanged DCF-based fair value of RM11.40/share (WACC: 7%, terminal growth rate: 2%). We ascribe a neutral 3-star ESG rating to TNB.

• Here are the key takeaways from TNB’s analyst briefing yesterday: -
  • TNB completed 6 data centre projects with a total capacity of 292MW this year. The data centres are owned by Microsoft, Bridge Data Centres, Vantage, GDS, AIMS and NTT Communications. The 85.5MW GDS Data Centre in Nusajaya Tech Park was commissioned in September 2023, ahead of schedule.
  • Electricity demand from the data centre industry in Malaysia is expected to exceed 5,000MW by FY35F. TNB has signed electricity supply agreements with another 8 data centres, with a capacity of 2,000MW in total.
  • GSparx, which is TNB’s rooftop solar unit, has secured 80% of its targeted order book of 386MWp for FY23E. Gsparx will be implementing one of NETR’s (National Energy Transition Roadmap) pilot projects at the City of Elmina in 1QFY24. The pilot project involves installing 4.5MW of solar rooftop systems in 450 homes in the City of Elmina, Shah Alam. 
  • TNB has partnered Charge+ for cross-border EV charging. The partnership will explore a cross-border roaming platform, which can connect customers to EV charging points in Malaysia and Singapore. Charge+ is a leading integrated EV charging solution provider in Singapore.
  • Under NETR, the target is to have 10,000 EV charging points by FY25F. The long-term objective is to have 30,000 charging points across 5 countries in SouthEast Asia by FY30F.

• TNB is currently trading at an attractive FY24F PE of 13x, which is lower than the 2-year average of 15x. Dividend yield is also decent at 4.6% for FY24F.

Source: AmInvest Research - 29 Nov 2023