Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: MIDF
Tenaga Nasional Bhd
(April 4, RM6.18)
Maintain buy at RM6.18 with target price RM7.98: Tenaga announced to Bursa Malaysia that its wholly owned subsidiary TNB Janamanjung Sdn Bhd (TNBJ) has signed an engineering, procurement and construction (EPC) agreement with the Consortium of Alstom Power System SA for the development of the 1,000MW Manjung coal-fired power plant.
This contract is for the construction of building structures and installation of one steam turbine, one super-critical boiler, coal and ash handling equipment, water treatment system, air quality control system as well as a waste water treatment system.
The consortium comprises: (i) Alstom Power System SA; (ii) Alstom (Wuhan) Engineering & Technology Co Ltd; (iii) Alstom Services Sdn'' Bhd; (iv) China National Machinery Import & Export Corp; and (v) CMC Machipex Sdn Bhd.
The contract price is US$810 million (RM2.45 billion), '180 million (RM772.2 million) and RM1.8 billion, or about RM5 billion in total. The project is expected to be completed and come into operation by March 2015. The development of the 1,000MW Manjung coal-fired power plant project is for a period of four years, and payments will be made in accordance with the progress of the project.
In view of the fact that'' the power plant is scheduled to start operations in 2015, we have made no changes to our'' forecasts. We have factored in a cost of'' US$1.5 million per MW of capacity for the 1,000MW plant in our balance sheet forecasts.
We expect construction to begin in FY11. We expect'' the project to be funded on a 70:30 to 80:20 debt-equity ratio, with the debt portion to be satisfied via a long-term bond issuance. Tenaga will need to cough up about RM800 million to RM900 million in equity, which seems manageable given that its cash balance has increased to RM9.2 billion as at end-November 2010.
We reiterate our 'buy' recommendation with the target price maintained at RM7.98, based on discounted cash flow valuation (weighted average cost of capital: 10.99%, terminal growth: 3%). The stock currently trades at a fair FY11 price-earnings ratio of 10 times, lower than its three-year average of 14 times. ' MIDF Research, April 4
This article appeared in The Edge Financial Daily, April 5, 2011.
Company Name: TENAGA NASIONAL BHD
Research House: MIDF
Tenaga Nasional Bhd
(April 4, RM6.18)
Maintain buy at RM6.18 with target price RM7.98: Tenaga announced to Bursa Malaysia that its wholly owned subsidiary TNB Janamanjung Sdn Bhd (TNBJ) has signed an engineering, procurement and construction (EPC) agreement with the Consortium of Alstom Power System SA for the development of the 1,000MW Manjung coal-fired power plant.
This contract is for the construction of building structures and installation of one steam turbine, one super-critical boiler, coal and ash handling equipment, water treatment system, air quality control system as well as a waste water treatment system.
The consortium comprises: (i) Alstom Power System SA; (ii) Alstom (Wuhan) Engineering & Technology Co Ltd; (iii) Alstom Services Sdn'' Bhd; (iv) China National Machinery Import & Export Corp; and (v) CMC Machipex Sdn Bhd.
The contract price is US$810 million (RM2.45 billion), '180 million (RM772.2 million) and RM1.8 billion, or about RM5 billion in total. The project is expected to be completed and come into operation by March 2015. The development of the 1,000MW Manjung coal-fired power plant project is for a period of four years, and payments will be made in accordance with the progress of the project.
In view of the fact that'' the power plant is scheduled to start operations in 2015, we have made no changes to our'' forecasts. We have factored in a cost of'' US$1.5 million per MW of capacity for the 1,000MW plant in our balance sheet forecasts.
We expect construction to begin in FY11. We expect'' the project to be funded on a 70:30 to 80:20 debt-equity ratio, with the debt portion to be satisfied via a long-term bond issuance. Tenaga will need to cough up about RM800 million to RM900 million in equity, which seems manageable given that its cash balance has increased to RM9.2 billion as at end-November 2010.
We reiterate our 'buy' recommendation with the target price maintained at RM7.98, based on discounted cash flow valuation (weighted average cost of capital: 10.99%, terminal growth: 3%). The stock currently trades at a fair FY11 price-earnings ratio of 10 times, lower than its three-year average of 14 times. ' MIDF Research, April 4
This article appeared in The Edge Financial Daily, April 5, 2011.
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