TNB’s new wind farm acquisition in UK justified

PETALING JAYA: Tenaga Nasional Bhd‘s (TNB) newest acquisition of a wind farm within the UK seems to be barely expensive on the floor when in comparison with an identical wind farm transaction that will likely be finalized quickly within the second quarter of this yr.

The group had introduced the acquisition of your complete stake in a 97.3 megawatts (MW) onshore wind energy portfolio in the UK for £145.9mil (RM805mil).

Noting the upper than ordinary acquisition worth, TA Analysis stated that the comparable acquisition refers back to the acquisition of a 50% stake within the 312MW Borkum Riffgrund 1 (BR1) offshore wind farm in Germany.

“It consists of 78 Siemens Gamesa 4MW generators which have been operational since 2015. Irish funding firm Greencoat Renewables PLC pays a complete money consideration of £126mil (RM700mil) for BR1.

This interprets to £805,000 (RM4.4mil) per MW versus £1.5mil (RM8.2mil) per MW that TNB had paid for its new wind belongings,” TA Analysis stated.

“Sometimes, we’d anticipate offshore wind farms equivalent to BR1 to fetch greater valuations because of costlier building prices.

Nonetheless, we imagine the 86% premium for TNB’s new belongings is considerably justified, provided that it has locked-in long run eligibility for UK’s Feed-in-Tariff (FiT) and Renewable Obligation Certificates (ROC) subsidy schemes. In distinction, BRI’s eligibility for Germany’s fixed-price contract for distinction expires quickly in September 2024,” it added.

TA Analysis stated TNB has greater than ample capability to fund this new acquisition which is underpinned by its wholesome stability sheet with internet gearing of 0.7 occasions and a money pile of RM6.7bil.

“We’re constructive on this acquisition as it is going to improve TNB’s environmental, social and governance standing. Furthermore, the belongings are eligible for FiT or ROC subsidy regimes, which suggest steady long-term revenues,” TA Analysis stated, sustaining its “purchase” name on TNB with an unchanged discounted money movement goal worth of RM10.90.

In the meantime Public Funding Analysis stated TNB’s unit Vantage RE Ltd’s complete operational renewable power capability will develop by 23% from 433MW to 530MW quickly with this newest deal.

“This comes as no shock as TNB had already indicated in its current outcomes briefing that it’s taking a look at a possible acquisition of recent belongings in UK which is predicted by the second quarter of 2022. Pending extra particulars, we hold our earnings unchanged for now ,” Public Funding Analysis stated in its report.

The seller for this deal is Capital Dynamics Ltd, which is an unbiased international asset administration agency and one of many world’s main clear power traders.

Capital Dynamics’ focus is on non-public belongings, together with non-public fairness, non-public credit score and clear power.

Public Funding Analysis famous that Vantage RE’s presence is seen as a significant part to develop TNB’s renewable power capability portfolio with rapid development plan to concentrate on the acquisition of sponsored ROC and FiT belongings throughout the UK and Eire.

TNB’s renewable power footprint within the UK and Europe began in Could 2021.

The analysis home famous that TNB has additionally efficiently acquired a 49% stake in Blyth Offshore Demonstrator Ltd, which is an offshore UK wind farm firm in October 2021.

The analysis home maintained its “outperform” name with an unchanged discounted money movement derived goal worth of RM12.42 on TNB.


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