Tenaga’s sales shoot through the roof, stronger growth anticipated

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KUCHING: Tenaga Nasional Bhd’s (Tenaga) sales demand in January registered a strong five per cent year on year (y-o-y) growth against one per cent seen the prior month.

MIDF Amanah Investment Bank Bhd (MIDF Research) observed that the average sales demand growth for the first two months of 2QFY16 is already showing an average 3.2 per cent y-o-y growth after an exceptionally strong 1QFY16 growth.

“More importantly, February 2016 system generation data registered an even stronger seven per cent y-o-y growth compared to January 2016 system generation growth of six per cent y-o-y,’ it said.

“March 2016’s numbers tapered off slightly to a five per cent y-o-y growth, but is still much stronger than the 2.2 to 2.5 per cent y-o-y sales demand growth seen in the past two years and management’s target of 2.2 per cent.

“For the first 18 months of April, system generation suggests an average of six per cent y-o-y growth.”

Meanwhile, peak demand tested new highs in April. The power sector achieved new peak demand twice in March 2016, namely 17,175MW on March 9 and 17,358MW on March 21.

In April however, peak demand tested new highs four times. Over April 11 to 14, new peak demand achieved were 17,427MW, 17,596MW, 17,634MW and the latest 17,689MW.

“Also, Tenaga’s subsidiary, TNB Fuel Services Sdn Bhd, entered into five Long Term charter ownership agreements (COAs) worth US$537 million with four local shipping companies. The COA involves the shipment of 82.5 million tonnes of coal over the next 10 to 15 years and averaging out to U$D6.51 per tonne, higher than current spot rates.

“Despite the premium rates secured, we view the agreement positively, given the volatility in shipping rates. Tenaga expects the agreements to constitute 18.75 per cent of its total shipping services by 2019 when it is expected to consume 40m tonnes of coal per annum.

“Apart from the COAs providing some much needed support to the local shipping industry, the agreements also allow Tenaga to diversify its freight contracts to 60 per cent term COAs, 20 per cent spot contracts and 20 per cent long term COAs.”