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TENAGA (5347) TENAGA NASIONAL BHD  sets aside RM9.5b for FY21 capex, maintains dividend policy of 30-60%

KUALA LUMPUR (March 19): Utility giant Tenaga Nasional Bhd (TNB) has set aside a capital expenditure (capex) of RM9.5 billion for the financial year ending Dec 31, 2021 (FY21).

Of the total capex, the bulk or RM7.3 billion will be for regulated recurring expenditure, while RM2.2 billion will be for others, according to TNB’s investor presentation as at Dec 31, 2020.

Looking ahead into FY21, TNB is expecting the lockdown's impact on electricity demand to be less severe than in FY20, given that most of the industrial and commercial sectors are allowed to operate during MCO 2.0.

Under Regulatory Period 2 (RP2) extension year, TNB’s approved demand forecast is 113,909 GWh or 2.9% growth compared with Planning and Implementation Committee for Electricity and Supply Tariff of Malaysia (JPPPET)'s revised FY20 forecast.

On Dec 23, 2020, the Energy Commission (EC) had approved the RP2 extension parameters under the incentive-based regulation (IBR) framework. “This extension instils confidence in the effectiveness of the IBR mechanism to maintain stability in the power industry,” said TNB.

Noting that the RP2 extension approved parameters are fair and transparent, TNB said its regulated entities' earnings will remain stable at base tariff of 39.45 sen per kiloWatt-hour (kwh) and weighted average cost of capital (WACC) of 7.3%.

On top of this, EC has allowed higher allowance for doubtful debt (ADD) of RM200 million for FY21, versus RM94.3 million for FY20, in consideration of impacted collection due to the MCO.

On the international front, TNB’s immediate strategy is to grow its international renewable energy (RE) business to a sizable portfolio through acquisitions of operational assets and greenfield development.

“Our focus on RE is further supported by our observations of the global energy market during Covid-19 induced lockdowns. During this period, RE has shown to be a resilient source, where it has even increased market share amidst changing demand and supply dynamics of the sector,” said TNB.

TNB said it will be executing a strategy aimed at protecting value from existing assets, and creating value for performing assets, adding that part of this strategy involves executing a plan focusing on growing TNB’s international RE business leveraging existing assets, capabilities and experience.

Additionally, TNB has also maintained its dividend policy of 30% to 60% dividend payout ratio, based on the reported consolidated net profit attributable to shareholders after minority interest, excluding extraordinary, non-recurring items.

In FY20, TNB had declared a dividend of 80 sen per share, amounting to RM4.56 billion. This represents a 58.5% dividend payout.

At noon break, TNB shares slipped four sen or 0.37% to RM10.80, valuing it at RM61.61 billion. Some 1.95 million shares were traded.


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