KUALA LUMPUR (Aug 7): MARC Ratings has affirmed Tenaga Nasional Bhd’s (KL:TENAGA) corporate credit rating at AAA with a stable outlook.
Tenaga’s strong credit profile reflects its monopoly on electricity transmission in Peninsular Malaysia and Sabah, and its status as the largest domestic electricity producer, distributor and retailer, MARC said in a note.
According to the rating agency's assessment, the likelihood of government support to the utility group is very high based on its strategic importance as the country’s principal energy provider.
"Accordingly, the rating agency has provided a two-notch uplift to TNB’s standalone rating," it said.
On Tenaga's 2024 performance, MARC said it expects steady earnings partly "based on expected narrowing of negative fuel margins".
As for the shutdown at its Janamanjung coal plant back in 2023, MARC sees it to have "moderate" impact on capacity payments.
Commenting on capital spending, MARC sees an increase moving forward but not substantially "as reflected by a debt-to-equity ratio of 1.0x"
"This view is based on the staggered expansion plans that would be aided by internal cash generation and available liquidity," it said.
The rating agency notes that Tenaga has evolved its strategy in line with the rapid changes in the domestic energy industry.
These include its capital investments that are generally aligned with the government’s National Energy Transition Roadmap; going forward, renewable energy sources would drive capacity expansion, it said.
In the first quarter ended March 31, 2024 (1QFY2024), Tenaga's net profit fell 28.6% to RM715.7 million or 12.37 sen per share, from RM1.002 billion or 17.42 sen per share, taking into account forex losses and higher taxations incurred.
However, revenue rose 8.04% to RM13.64 billion from RM12.63 billion, on a 9.9% growth in demand. It also booked lower generation costs in the quarter.
Shares of Tenaga closed up 30 sen or 2.2% at RM13.94, giving it a market capitalisation of RM79.29 billion. The counter is up 38.84% this year.