PETALING JAYA: Despite revised concession terms, the earnings of Mega First Corp Bhd
’s Don Sahong hydropower project in Laos remains intact.
The revised concession came to incorporate the project’s fifth turbine, which took effect on Jan 1, 2025. It also extended the concession tenure by more than four years, according to Maybank investment Bank (Maybank IB) Research.
“Despite a slight initial reduction in tariff to US six cents a kilowatt, the upfront payment of the royalty at US$82.5mil for 2,140 gigawatt hours of annual generation, implied an internal rate of return of 13% for both accretes and smoothen Don Sahong’s earnings profile over the concession tenure of 25 years in total,” the research house said in a report.
It said investors have yet to appreciate the potential accretion from Don Sahong’s revised concession terms going by Mega First’s share price correction by about 7% year-to-date, Water levels at Don Sahong have remained at healthy levels despite the dry season from last December to May 2025.
“Despite various headlines on a possible dryer-than-expected weather along the Mekong River, the water level at Don Sahong has remained similar to 2024, and comfortably above the historical minimum. “With earnings being generation-dependent, we thus expect earnings to remain intact for both the fourth quarter of 2024 (4Q24) and 1Q25.”
To reflect the revised concession terms for Don Sahong, Maybank IB has revised its financial year 2026 up.
Its target price is consequently raised to RM5.60 (from RM4.80), reiterating “buy”.
In the pipeline are non-renewable energy ventures into modern farming and hospitals. Mega First continues to work towards raising its solar capacity in an accretive manner.
