said its unit, TNB Bukit Selambau Solar Sdn Bhd (TBSS), had reached financial close for the project with MUFG Bank (M) Bhd (formerly Bank of Tokyo-Mitsubishi UFJ (M) Bhd).
KUALA LUMPUR: AmInvestment Research is overweight on the power sector on expectation of unit demand to normalise after eking out 1% growth in 2017 following an exceptional 2016.
"For CY18, we believe demand will pick up to 3.2% on the electricity demand/GDP growth multiplier in Peninsular Malaysia, which has been close to 0.5x-0.6x (Exhibit 2). Our stance on the sector is invariably tied to Tenaga, which is trading at attractive valuations," it said.
The research firm's stance on the sector could also be strengthened by the outcome of new regulatory requirements in December, the strengthening of the ringgit, and an amicable settlement to Tenaga's tax dispute with the Inland Revenue Board.
Risks for the sector include perceived heightened regulatory risk if Tenaga is unable to recoup its fuel costs without a correpsonding electricity tariff rebate reduction, or if it sees an unfavourable outcome for its key drivers.
AmInvestment Research noted that Tenaga is expected to report cost under-recovery owing to fuel prices being above reference prices. However, the earnings impact would be neutral as it will be reversed during phases of cost over-recovery or through an electricity tariff hike.
The research firm's top pick is Tenaga Nasional, and has issued a "buy" call for the counter with a fair value of RM17.72.
It has a "hold" call on YTL Power with a fair value of RM1.38 and a "hold" call on Malakoff with a fair value of RM1.09.
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