KUALA LUMPUR: Research homes depart their earnings projections on Tenaga Nasional Nasional Bhd (TNB) unchanged pending additional particulars of Regulatory Period 3 (RP3).
The authorities on Friday saved the bottom tariff for RP3 at 39.45 sen kiloWatt-hour (kWh) for 2022-2024.
It has additionally permitted the continued implementation of the imbalance value pass-through (ICPT) mechanism for the interval of Feb 1-June 30, 2022 to deal with the extra technology prices because of the increased coal costs used for the provision of electrical energy through the second half of 2021.
RHB Research reckons the precise earnings impact of RP3 to TNB remains unclear for now, as the important thing parameters reminiscent of demand development, weighted common value of capital (WACC), capital expenditure (capex), regulated asset base (RAB), working expenditure, and gasoline benchmark — weren’t disclosed.
‘’There is a risk that TNB’s earnings could possibly be negatively affected if the gasoline parameters are adjusted upwards with out altering the bottom tariff.
‘’If the gasoline benchmarks are just like RP2+ parameters, Kumpulan Wang Industri Elektrik (KWIE) might proceed to subsidise the home customers, and we additionally anticipate a better surcharge on non-domestic customers going ahead,’’ it mentioned in a observe.
RHB Research mentioned assuming an annual capex of RM7 billion and seven.0 per cent WACC, regulatory earnings are estimated to develop 2.6 per cent pear annum in RP3 and any discount of 0.1 per cent in WACC will cut back the regulatory earnings by RM66 million.
Meanwhile, Kenanga Research mentioned the three.7 sen/kWh tariff surcharge announcement is optimistic as to clear earlier market concern of TNB having to bear the additional value.
‘’Nonetheless, there isn’t a additional element reminiscent of WACC, reference worth of coal and fuel, and demand development issue. We consider these parameters are the identical as RP2, which was at 7.3 per cent, US$75 per metric tonne, RM27.2 per million British thermal items (MMBtu), and 1.8 per cent-2.0 per cent, respectively.
Kenanga Research mentioned common coal spot worth soared 120 per cent in 2021 to US$120 per metric tonne from US$61 per metric tonne in 2020.
On Friday, spot worth closed at US$226 per metric tonne or common year-to-date of US$197 per metric tonne, which was 9.0 per cent increased than of in fourth quarter 2021 (This fall).
‘’Without adjustment to ICPT, this could impact TNB’s This fall FY21 outcomes. However, that is solely momentary because the surcharge in Feb-Jun 2022 will neutralise its ahead earnings.
‘’As such, we maintain FY21-FY22 estimates unchanged,’’ it added.
MIDF Research mentioned for the bottom RP2 interval, RAB was projected to develop at a mean annual price of 4.5 per cent.
‘’Given that the tariff schedule remains unchanged for RP3, key questions stay.
‘’If there’s a change in buyer combine assumption which might result in adjustments to implied reference worth, and if the implied reference worth remains unchanged, whether or not a doubtlessly increased RAB will actually translate into increased regulated earnings for TNB,” it posited.
Overall, it remains conservative and initiatives flattish development in TNB’s monetary yr 2022 (FY22) earnings.
PublicInvest Research mentioned the transfer to approve RP3 was a shock because the Energy Commission has simply determined to increase RP2 for the second time with all parameters of Incentive Base Regulation framework (IBR) unchanged efficient Jan 1, 2022 till “additional discover” simply few weeks in the past.
‘’To recap, RP2, which expired in 2020, had been already prolonged for one yr till end-2021 and was supposed to get replaced by RP3 by end-2021,’’ it mentioned.
In RP2, TNB requested for a RM25.1 billion capex allowance, however was solely allowed RM18.8 billion.
‘’For RP3, we perceive that it’s proposing a capex allocation of RM24 billion for its regulated property for the three-year interval.
‘’While RAB is more likely to enhance, the optimistic will likely be negated by the WACC being additional lowered from 7.3 per cent underneath RP2,’’ it mentioned. – Bernama
