国能有限公司（TNB）：买入：在主观性中寻找客观性（第三部分）

Disclosures & DisclaimerThis report must be read with thedisclosures and the analyst certifications inthe Disclosure appendix, and with the Disclaimer, which forms part of it.MDDI (P) 005/01/2025 MDDI (P) 006/09/2024 MDDI (P) 004/10/2024 MDDI (P) 020/10/2024Q125 raises questions on KPIslike power demand, DC outlook,generation business and contingent capex……but management commentary suggests trends in Q22025and beyond will show improvementMaintain Buy witha lower TP ofMYR17.20(fromMYR18.30)as weincreasethetax ratebased on management guidanceOptimismor reality–Q2/Q3 2025 toanswer:TNBhosted an analyst call today (28 May)to discuss 1Q25 results.Unsurprisingly,the key discussion points were on trends related topower demand, data centre (DC) investments, performance of domestic generationbusiness,and contingent capex realization.In their answers to these points(discussedbelow), managementsharedoptimism based on the trends seen in2Q25so far, andexpressed positivity inguidance for2025and beyond.As we discussed in our earlierreports (seeFinding objectivity in subjectivity (Part II), 6 March 2025), we believe themarket is uncertain about some of these trends going forward, in particular contingentcapex utilization and DC investments. As such, we believe if the upcoming quarter results(Q2/Q3 2025) do show animprovedtrend, it would bereceivedpositively by the market.Trends–a comparison of1Q25and management guidance:(1)Power demand:Power demand in Peninsular Malaysia was down by 1.2%y-o-yin 1Q25. However, TNBreiterated its guidance of 3.5-4.5% growth for 2025 and highlighted the recent trend ofmultiple instances ofhighpeak demandin Mayand projected GDP growth for the countryas the keydrivers.(2)DC investments: DC load utilization increased to 485MW in 1Q25vs 148MW in1Q24 and 405MW in 4Q24. The companysignedfivenewelectricitysupplyagreements(ESAs) for 666MW in 1Q25. In total, TNB has secured 43 DC projects with acapacity of 6.4GW.Managementremains positive andstated that it continues tohavediscussions with customersand expectsto sign more ESAs in 2025.(3)Domesticgeneration business:While the net profit for this division did improve to MYR25.4m in1Q25 vs a loss of MYR80.4m in 1Q24, thisquarterlyrun-rate issignificantlybelowmanagement’sguidance of MYR250m forFY2025. TNB reiterated thisguidance againandstated it continuesto improve efficiency and availability at its plants and highlightedmonth of April where all coal plants achieved full capacitypayments.(4)Contingentcapex realization:In 1Q25, MYR128m of contingent capex was realized with guidanceof MYR1-2bn for 2025.For the regulatory period 4 (RP4), management projects 70% ofMYR16.3bn of contingent capex to be realized in addition to base capex of MYR26.55bn.For financial trends in 1Q25 results, see1Q25 results review-first take, 27 May 2025.Maintain Buy:Weincorporatemanagement’sguidanceof expected higher tax rate(around 30%)which drives a cut in our 2025-27 net profit estimates by6-9% and a lowerTP of MYR17.20(from MYR18.30).Trading at a 2025e EV/EBITDA of 7.3x, we retain ourBuy rating as the stock offers exposure to the theme of data centre investment andeconomic growth in Malaysia (seeTenaga: The Malaysia power play, 6 Nov 2024).Tenaga(TNB MK)Buy:Finding objectivity in subjectivity (Part III) ◆◆◆ Free floatBBGRIC 57%TNB MKTENA.KL12/2026e12/2027e0.760.830.920.830.900.98-8.5-7.3-6.30.830.880.9218.416.915.23.84.14.67.37.06.77.27.78.312.0015.0018.0005/25 2Financial statementsYear to12/2024a12/2025eProfit & loss summary(Myrrh)Revenue56,73759,596EBITDA19,95221,306Depreciation & amortisation-11,232-11,675Operatingprofit/EBIT8,7209,631Net interest-3,469-3,391PBT5,8156,348HSBC PBT5,8156,348Taxation-1,085-1,903Net profit4,6994,415HSBC net profit4,3394,415Cash flow summary(MYRm)Cash flow from operations22,26920,002Capex-11,184-15,808Cash flow from investment-11,337-15,053Dividends-3,074-3,080Change in net debt-6,7246,355FCF equity7,279-394Balance sheet summary(MYRm)Intangible fixed assets953953Tangible fixed assets156,668163,873Current assets40,30835,531Cash & others19,60114,246Total assets205,056207,469Operating liabilities75,81676,992Gross debt86,11787,117Net debt66,51672,871Shareholders' funds60,37161,735Invested capital131,222137,829Ratio, growth and per share analysisYear to12/2024a12/2025eY-o-y % changeRevenue6.95.0EBITDA7.16.8Operating profit18.510.4PBT72.49.2HSBC EPS51.11.7Ratios (%)Revenue/IC (x)0.40.4ROIC5.35.0ROE7.37.2ROA3.93.5EBITDA margin35.235.8Operating profit margin15.416.2EBITDA/net interest (x)5.86.3Net debt/equity106.3114.0Net debt/EBITDA (x)3.33.4CF from operations/net debt33.527.4Per share data(MYR)EPS Rep (diluted)0.810.76HSBC EPS(diluted)0.750.76DPS0.510.53Book value10.4110.64Financials & valuation:Tenaga Valuation and risksWecut our net profit estimates by 6-9%for 2025-27 as we factorin the management guidance ofhigher tax ratein our model.We keep our revenue estimates unchanged. We summarise ourchanges in estimates below.Tenaga–changes in estimates__