Analysts say Tenaga Nasional Bhd is undertaking two studies — one on its capital optimisation exercise and the other on a 10-year business strategic direction. Pic by Asyraf Hamzah

KUALA LUMPUR: Tenaga Nasional Bhd (TNB), the country’s largest electricity company, is embarking on the “Reimagining TNB” transformation programme to turn major challenges into opportunities.

President and chief executive officer Datuk Seri Azman Mohd said the programme is necessary in today’s world as the emergence of various game-changing technologies is changing the utility landscape.

“We in TNB view these big shifts (major challenges) as opportunities and we are embracing them with specific strategies under our ‘Reimagining TNB’ transformation programme,” he said in a statement yesterday.

Azman said the industry is facing challenges in addressing energy security, providing access to affordable energy services and maintaining environmentally-friendly production and energy usage.

“The challenges, among others, come from rising competition from renewable energy, increasing efficiency of energy storage batteries, Internet of Things, smart grid and smart cities, and the need to incorporate them into business and operation.”

Azman said turning the challengers into opportunities involves four main thrusts.

“These are actively pursuing future generation sources, especially renewable energy; grid of the future including smart grid; winning the customer for new and enhanced services and products; and, regulations, particularly under Incentive-Based Regulations.”

On the surface, the “Reimagining TNB” programme may look like a preview of its 10-year business plan.

A TNB spokesperson did not deny or confirm that the programme is the utility giant’s 10-year business plan.

According to analysts, TNB is undertaking two studies — one on its capital optimisation exercise and the other on a 10-year business strategic direction.

“We expect the 10-year business strategic direction to emphasise on TNB’s regional footprint expansion,” said MIDF Research analyst Hafriz Hezry.

TNB, via its repair and maintenance arm, TNB Repair and Maintenance Sdn Bhd (TNB Remaco), has a presence in Pakistan, Kuwait and Saudi Arabia.

TNB Remaco has also been awarded jobs in Vietnam, Singapore, Brunei, Indonesia, Myanmar, Chile and Argentina.

Meanwhile, MIDF Research has maintained its “buy” recommendation and target price of RM16.80 for TNB.

This was on the back of strong earnings visibility post-imbalance cost pass-through tariff implementation, dividend catalyst on the back of free cash-flow yield and the upcoming capital optimisation exercise, as well as overseas expansion that provides stronger growth in the mid-term.

According to data provided by Bloomberg, there were 25 research houses covering the stock recently with a target price as high as RM20, of which 22 of them placed “buy” recommendations and three placed “sell” recommendations.

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