We maintain our Buy recommendation with a significantly higher TP of RM4.08 (previously RM2.32), based on 60% discount on our SOP valuation of RM10.20. Ipmuda announced that it plans to develop two large Run-of-River Hydroplants with a total installed capacity of up to 160MW - 4x larger than its existing one. Management shared that the project would cost around RM2.4b. Based on 29sen/kWh tariff, 70% utilisation rate, three years construction period and funded via 80% debt and 20% equity, we estimate the plants to contribute a total of RM103m per year from FY26 onwards, with an annual FCFE of ~RM130m. Using this FCFE, we derive an equity valuation of ~RM790m (RM7.79 per share) for the two projects, based on cost of equity of 12.8% and a 40-year PPA. We assign a 60% discount to our SOP value pending achievement of several project key milestones until actual commissioning in FY26.
Produced by: KAF Equities Sdn Bhd Distributed by: Jefferies Group LLC, including Jefferies LLC in the U.S. and Jefferies Hong Kong Limited in Hong Kong
Received approval to develop two hydropower plants in Sabah.
Ipmuda announced that the company has received the nod from the State Government of Sabah to develop two Runof-River Hydroelectric Cascading Scheme to be located in Sungai Maligan and Ulu Padas, Sipitang, Sabah with an installed capacity of up to 31MW and 129MW, respectively.
The two projects will be undertaken via joint venture.
Ipmuda, through its wholly-owned subsidiary, Oriole Power Sdn Bhd (Oriole) has entered into shareholders’ agreements with Inno Hydropower (M) Sdn Bhd (Inno) to jointly carry out the Sungai Maligan project. The Ulu Padas project will be jointly carried with Elopura Power Sdn Bhd (Elopura). Both Inno and Elopura’s ultimate parent company is Kumuplan Yayasan Sabah. Currently, the company is in the process of procuring all necessary approvals from the Ministry of Energy and Natural Resources, Energy Commission and other relevant state authorities to execute power purchase agreements (PPA).
We are positive on the news as the two hydropower plants will significantly increase the group’s hydro capacity fivefold to 200MW, closing the gap on Sabah’s target additional generation capacity of 100-200MW by 2025. Currently, Ipmuda is in the midst of acquiring the 40MW Telekosang mini hydropower plant (THP) in Tenom, Sabah. The plant is on track for commercial operation in Dec 2021, with a 21-year PPA.
2022 will also mark a year of important financial milestone.
Hence, 2022 will also mark an important financial milestone for the group, as it will see maiden contribution from the THP. THP is a key asset to drive earnings growth as it pivots from trading to renewable energy. It will also be a testament to the new management’s capabilities and indicate their execution ability to take on larger projects
We maintain our Buy recommendation with a significantly higher TP of RM4.08 (previously RM2.32), based on 60% discount on our SOP valuation of RM10.20. Management shared that the project would cost around RM2.4b. Based on 29sen/kWh tariff,
70% utilisation rate, three years construction period and funded via 80% debt and 20% equity, we estimate the plants to contribute a total of RM103m per year to the group from FY26 onwards, with an annual FCFE of ~RM130m. Using this FCFE, we derive an equity valuation of ~RM790m for the two projects, based on cost of equity of 12.8% and a 40-year PPA. We assign a 60% discount to our SOP value pending achievement of several project key milestones (refer to Exhibit 1) until actual commissioning in FY26.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Greensky
264 posts
Posted by Greensky > 2021-11-15 10:46 | Report Abuse
JKPTR we don't have to be genius, simple Google will do. I suggest you read more on the subject.