The research house has tweaked its earnings forecasts to adjust for the new start date and tenure of the Malaysia PPA extension.
“Our RM1.50 target price is unchanged, based on a 10% discount to our RNAV estimate of RM1.67 per share (fully diluted), which is in turn derived from a sum-of-parts with the operating entities being valued by DCF (zero value to PowerSeraya),” Maybank said.
It added that its RNAV had yet to include the possible accretion from the new projects (Tj Jati A and APCO).
YTL Power’s Paka plant was previously granted a PPA extension effective March 2016 – December 2018.
The extension, however, was never formalised due to disagreements with Tenaga Nasional Bhd (TNB) over land lease rates (TNB owns the land on which the power plant is situated).
On Tuesday, TNB announced that it has signed a LLA and PPA extension for YTL Power’s Paka plant.
The committed capacity of 585MW remains unchanged, but the tenure of the new PPA extension has now been extended by another year to three years ten months beginning September 2017.
“Financial terms were not disclosed, but we believe YTL Power probably agreed to TNB’s higher land lease rates, and likely sought an additional year of PPA tenure in return,” Maybank said.
“We previously assumed the PPA extension would take effect in July 2017, so this represents a two months delay.
“The financial impact is not particularly significant, with the plant contributing less than 5% to group pre-tax profit on a 12-month basis and 9 sen per share to our RNAV,” the research house said.
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