Latest news with #AffinHwangResearch
The Star
5 days ago
- Business
- The Star
TNB to benefit from Spark's RE pipeline
Affin Hwang Research remains upbeat on TNB's business outlook. PETALING JAYA: The business prospects and renewable energy (RE) portfolio of Tenaga Nasional Bhd 's (TNB) Australian unit, Spark Renewables, should help in delivering the former's RE target. Affin Hwang Research maintained its earnings forecasts and discounted cash flow (DCF)-derived 12-month target price (TP) of RM16.20 a share for TNB. It retained its 'buy' call on the stock. However, the Federal Court's decision on the reinvestment allowance poses downside risks to TNB's earnings and target price. Under a bear-case scenario, TNB's net cash exposure to additional taxation of RM6.5bil is equivalent to RM1.12 per share, which may reduce its DCF-derived TP by 7%. As TNB is actively pursuing the investment allowance claim under Schedule 7B, it expects the eventual cash outflow to be lower than the RM6.5bil estimates. Affin Hwang Research said TNB's market capitalisation has declined by RM10bil to RM11bil since the announcement of the Federal Court's judgement on the reinvestment allowance. It believes the decline in share price has more than reflected the potential cash flow impact of these additional tax liabilities. Operationally, the research house remains upbeat on TNB's business outlook. The key downside risks cited for its stock rating are unfavourable regulatory changes, operational hiccups and higher-than-expected operating costs. It continues to like TNB, a direct beneficiary of Malaysia's energy transition drive and a benefactor of the rising electricity demand, driven by new data centres. Affin Hwang Research, during its recent technical visit to Sydney, Australia, met with Spark, which is focused on developing and owning RE assets. The research house is positive on Spark's business prospects.
The Star
6 days ago
- Business
- The Star
Gas Malaysia's bottom line outlook largely intact
Affin Hwang Research anticipates the group to report lower core net profit of RM391mil for 2025. PETALING JAYA: Affin Hwang Investment Bank Research projects Gas Malaysia Bhd 's 2025 earnings to decline by 11% on lower gas prices and compression in gas shipping margins, but notes that its earnings outlook is largely intact. 'We anticipate the group to report lower core net profit of RM391mil for 2025 due to lower profit margin from Gas Malaysia Energy and Services under the new gas shipping agreements and declining natural gas selling prices, tracking weaker global crude oil prices and the strengthening of ringgit to US dollar,' it said. The research house said the lower natural gas prices are tracking weaker global crude oil prices as the global oil market is likely to enter an oversupply phase this year and next, assuming no major disruptions to oil supply. It explained that lower oil prices will be driven by the Organisation of the Petroleum Exporting Countries and allies acceleration in unwinding its voluntary supply cut program, coupled with slowing demand growth from China. 'Global demand growth will continue to be led by Asia Pacific, particularly India, while demand in other regions is expected to remain relatively flat,' Affin Hwang Research added. It forecasts 2025 and 2026 Brent crude oil prices to be at US$70 per barrel and US$65 per barrel, respectively, implying a 13% and 19% decline from 2024 average Brent crude price of US$80 per barrel. However, it believes higher natural gas sales volume, driven by market share gains, should help cushion the impact. That said, the research house likes Gas Malaysia's prospects as it is developing a new regasification terminal. However, it believes it is premature to incorporate earnings contribution or potential valuation uplift from such a project, as the group has yet to finalise its plan and submit its proposal to the Energy Commission.
