KUALA LUMPUR: MIDF Research has reaffirmed its “buy” call on Tenaga Nasional Bhd (TNB) at an unchanged target price of RM14.40.
In a note today, the research house said dividend yields of 4%, peaking capital expenditure (capex), suggests room for a dividend upside or possible acquisitive growth, while monetisation of backbone fibre asset are key catalysts for the stock.
In a visit to TNB’s large-scale solar (LSS) 1 plants, TNB Sepang Solar (TSS), MIDF Research said that it expects the capex for cables, excluding costs for Right of Way, at RM1 million per kilometre (km).
“While actual capex details are not forthcoming, we estimate the TSS to have incurred a capex of between RM5.5 million to RM6 million per megawatt (MW) or a total of RM275 million to RM300 million as the project cost was locked in circa 2016,” it said.
MIDF Research also said that costs are expected to have come down since then to around RM3 million to RM4 million per MW now and this should be reflected in LSS2 (TNB Bukit Selambau) or LSS3 projects depending on when the costs are finalised.
To recap, TNB via the TSS had won the LSS1 bid to build and operate a 50MW solar plant at a 98.34 hectare site in Kuala Langat, which was leased from TNB at market rates, under a 21-year power purchase agreements.
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