Friday 29 Mar 2024
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KUALA LUMPUR (MAY 6): AmResearch has maintained a ‘buy’ rating on Tenaga Nasional at RM7.78 with an unchanged fair value of RM9.15, following the results of the 13th general election yesterday. 

AmReserach analyst Alex Goh said in a note today that the continuation of the Barisan Nasional-led federal government maintained Tenaga’s tariff repricing evolution as the opposition party had called for reviews of power purchase agreements which were signed years ago.

“In our view, an opposition-led government could have resulted in a deadlock on the expected regulatory changes for Tenaga as its incentive-based regulation proposal awaits the government’s approval in August this year,” he said.

This would also mean that the fresh 150 million standard cubic feet per day (mmscfd) of natural gas from the Lekas regassification plant in Malacca was likely to continue in June as expected, with a new electricity and gas tariff price structure in place, Goh said.

Given that Tenaga’s power grid remained the only off-taker for new power plants, we continued to view the group as the favourite to secure new open tenders and the competitive bids would drive down its fixed power generation costs even if the national utility does not secure the tenders, he added.

Goh said that they also expected Tenaga’s new power plant build-up to be uninterrupted by political uncertainties. The group, together with 1MDB-Mitsui, remains on the short-list for the Project 3A involving a brown-field 1,000MW coal-fired power plant.

 

 


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