Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: AMMB



AmResearch reiterates its "hold" call on Tenaga Nasional Bhd (TNB)'s plan to build power plants with capacities of over 100 megawatts (MW) each in Yemen.

TNB's chief executive officer Datuk Seri Che Khalib Mohamad Noh said the company aimed to build power plants with capacities of over 100 MW in Yemen to take advantage of the country's dire need for electricity.

AmResearch expects any initial Yemeni investment to have minimal impact on the group's earnings and net debt of RM13 billion compared with TNB's current installed capacity of 12,233 MW.

In a statement today, the research house said it would be negative if TNB were to take a significant equity stake in a Yemeni power project.

AmResearch said the view was based against a backdrop of past provisions for diminution in value for TNB's investment in Pakistan's 235 MW gas-fired power plant coupled with Yemen's uncertain political and regulatory risks.

"But, we believe management would attempt to mitigate the risks by focusing on operation and maintenance of power plants," it said.

The research house said Yemen was the least developed country in the Arab world, with an employment rate of 65 per cent amid dwindling natural resources as its oil reserves were expected to be depleted by 2017.

Since 2004, a civil war is being fought in Northern Yemen between Yemeni forces and Shiite Houthi rebels which has spread to the boarder region of Saudi Arabia, it said. -- Bernama