KUALA LUMPUR (July 31): RHB Research expects Tenaga Nasiona Bhd (KL:TENAGA) to post improved 2QFY2026 earnings, while forecasting its renewable energy (RE) mix to hit 49% by 2030.

"TNB will release its 2QFY2026 results on Aug 27. We expect earnings to improve sequentially on lower effective tax rate," it said in a note on Friday.

The house maintains its "buy" recommendation, with a target price of RM16.50, implying a 13% upside and a 4% yield.

"We believe the premium is justified, as TNB is the prime beneficiary of the National Energy Transition Roadmap (NETR), with the regulated framework providing a stable earnings base. Key downside risks include delayed capex [capital expenditure] approvals and a higher-than-expected tax rate."

Meanwhile, it forecasts Tenaga's RE mix to grow to 49% by 2030, with its international assets, including the UK-based unit Vantage RE, playing an important role in achieving this.

"While the growth will be largely driven by new domestic projects, we believe its international portfolio will play a role in improving TNB’s technical capabilities and project economics."

RHB said Tenaga's international RE assets currently contribute to 2% of group Ebitda.

At 12 times EV/Ebitda, which is parity to similar RE assets in the UK, RHB derive a RM1.6 billion equity value for the international business, which it deem as fair at 2% of its implied target market capitalisation for Tenaga.

Vantage RE, operates 908 megawatts (MW) of renewable energy assets (RE) in the UK and Ireland across 94 projects.

RE asset Whiteside Hill onshore wind farm near Glasgow annually powers 25,000 homes. Its asset capacity is above the global average of 25-35%.

The second international asset, 35MWp Eastfields solar farm, which owns advanced sun-tracking solar panels, has 10-20% higher generation output than fixed-angle solar panels.

Management is confident of securing a mix of wind and battery energy storage system (BESS) projects as it obtains key approvals for land and grid connections.