Tenaga Nasional Berhad (TNB)’s 1QFY22 core net profit came in at RM850.1m (-19.6% YoY, -14.0 QoQ) which constituted c.20% and c.18% of our and consensus full-year estimates. Current quarter’s profitability was impacted by Cukai Makmur amounting to RM113.5m and hence, we expect subsequent quarters to be stronger. For 1QFY22, performance of the Group was resilient, underpinned by electricity demand growth of 4% due to higher consumption recorded for commercial and domestic customers. Group subsidiaries' performance also improved as most businesses are allowed to operate with less restriction. In FY22, electricity demand growth is forecasted at 1.7% (115,835GWh), in line with GDP growth projection of between 5.3% and 6.3%. Total Group capital expenditure (capex) is RM11.8bn with RM6.9bn allocated for regulated capex and RM4.9bn for others. No change to our earnings estimates and we maintain our Outperform call with an unchanged DCF-derived TP of RM12.42.
- 1QFY22 revenue rose 32.4% YoY mainly due to ICPT surcharge of RM3,505.4m (versus 1QFY21 rebate of RM327.3m), higher sales of electricity and improved subsidiaries performance. Contributions from associates were higher mainly contributed by Blyth (wind offshore in the UK) and in the absence of full impairment of GMR Energy Limited (GMR) seen in 1QFY21. During the quarter, generation cost was higher due to higher coal prices which rose 109% to USD165.5/MT from USD79.20/MT a year ago. Net gearing remains steady at 39.7%.
- Renewable energy (RE) progress. For domestic renewable energy assets, TNB has signed a 30-year power purchase agreement for the 300MW Nenggiri hydro plant which is expected to commence in 1st June 2027. Construction works has started since 1st March 2022. It has also successfully commissioned a mini hydro of 4.0MW in Sungai Tersat, Kuala Berang on December 2021.
As for its UK / Europe renewable exposures, TNB has successfully acquired 97.3MW Onshore Wind Portfolio in the UK in April 2022. It has also successfully acquired a 49% stake in Blyth Offshore Demonstrator Ltd (BODL), an offshore UK wind farm company in October 2021, with existing floating offshore wind capacity of 41.5MW and further development rights for similar type of RE of up to 58.4MW. In May 2021, it acquired a 500kW FiT turbine in the UK. Elsewhere, the formation and establishment of Vantage RE Ltd or RACo has been completed on 1st July 2021. All in, the plan is to increase the Group’s RE capacity to 8,300MW by 2025 from 3,596MW currently
Source: PublicInvest Research - 31 May 2022