TNB capex reaching its peak, says analysts
KUALA LUMPUR: Tenaga Nasional Bhd’s (TNB) capital expenditure (capex) looks to have peaked, analysts opine in the group’s fourth quarter of financial year 2018 (4QFY18) results review, with minimal new generation projects expected in the pipeline.
According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), TNB’s capex in FY16-17 stood at RM11 billion-RM12 billion, whilst FY18 capex stood at RM11.8 billion, comprising RM5.3 billion for generation capex and the rest (RM6.5 billion) for transmission and distribution (T&D) recurring capex.
“With minimal new generation projects in the pipeline (and given the new Government’s indication of already high reserve capacity), we think TNB’s capex (generation capex) is already past peak – most of the existing projects have progressed well,” MIDF Research said. The research arm noted that Jimah East is 98 per cent completed, TNB Bukit Selambau (22 per cent) and Southern Power Generation (74 per cent).
“This suggests room for further growth in dividend payout. Management is guiding for lower RM9 billion to RM10 billion capex for FY19F.”
MIDF Research also opined that TNB will likely remain in the wholesale space for fibre.
“The current capex excludes TNB’s fibre plans – of which financial details is not forthcoming yet.
“The pilot project in Jasin had been completed to ascertain the technical aspect of it and management is now assessing the commercial aspect of the business plan.
“Chances are, TNB will likely remain in the regulated wholesale space and refrain from going into the higher risk retail segment.”