Published: Tuesday June 19, 2012 MYT 10:47:00 AM
Affin Research maintains Reduce on Tenaga
KUALA LUMPUR: Affin Investment Research is maintaining its Reduce recommendation on Tenaga Nasional with an unchanged target price of RM6.12, which is a 15% discount to its discounted cashflow of RM7.20 a share, discount rate of 7.5%; growth of 3.0%.
The research house said on Tuesday that Tenaga's MoU with PT PLN, the Indonesian state owned utility company involved in generation, transmission and distribution of electricity and PT Bukit Asam, would not have any near-term earnings impact.
The MoU, which was signed on Monday, is for two years and will cover the construction of a 275KV interconnection line from Telok Gong, Melaka to Garuda Sakti, Sumatera and the development and construction of a mine mouth coal fired power plant in Peranap, which is 250km south east of Pekanbaru, Sumatera.
"No near-term earnings impact on Tenaga as we understand that the coal-fired power plant will likely only commence operations in 2017. We estimate that the coal-fired power plant will likely cost some US$1.3mil a MW, if not more.
"Thus, the power plant itself should cost approximately RM4.1bil. The undersea cable (assuming similar cost structure as the aborted Bakun undersea cable project) can potentially cost up to RM1bil (RM15mil per km)," said Affin Research.