Tenaga Nasional (TNB) has divested its 100% stake in TNB Power Daharki Ltd (TPD), which owns a gas turbine power plant in Pakistan, for US$54.5m (RM229.58m). No change to our earnings estimates as the estimated gain on the asset disposal is minimal, at around USD5.3m (c.RM22m). The asset disposal is consistent with Group’s strategy to streamline its international portfolio by prioritising growth of renewable energy (RE) in its focus markets such as the UK, the rest of Europe, and Southeast Asia. We maintain our Outperform call, with DCF-derived TP also unchanged at RM12.42

• The gas turbine power plant disposed is located in Pakistan's Sindh province, and was one of TNB’s first international ventures. We understand that it is a 235MW combined-cycle gas turbine power plant that was commissioned 20 years ago in 2001, with a power purchase agreement expiring in September 2026.

• Net Zero Emissions by 2025. To recap, TNB recently announced its “Sustainability Pathway”, a blueprint with an aspiration to achieve net zero emissions by 2050. The pathway is underpinned by its commitment to reduce 35% of is emissions intensity as well as 50% of its coal generation capacity by 2035. As such, with the latest asset disposal, the Group can redeploy its capital to grow its overall renewable energy (RE) portfolio, mainly in the UK, Europe and Southeast Asia.

Source: PublicInvest Research - 1 Dec 2021