20050927 Hwang DBS Daily Focus

Highlights
>
> MISC-F Bhd - Only short term opportunity - Maintain Fully Valued
>
> The Baltic Dirty Tanker index has increased 41% since early-August 2004 on
> seasonal orders and higher demand resulting from the hurricanes in the US.
> MISC's petroleum division has the world's second largest fleet of Aframax
> vessels and will benefit from the upswing in tanker rates. However, the
> exact quantum will depend on the extent of the hurricane-boosted demand.
> MISC may gain on this short term exuberance, but we maintain our Fully
> Valued recommendation and RM17.20 price target as MISC's valuations have
> run ahead of its key LNG and petroleum peers.
>
> 
>
> Comments
>
> Tenaga Nasional - Tenaga awards 10MW of REPPA - Maintain Buy
>
> Tenaga Nasional has signed an agreement for the purchase of electricity
> generated by a small Renewable Energy (RE) power project developed by MHES
> Asia Sdn Bhd under the Small Renewable Energy Power Programme or widely
> known as SREP. Tenaga has agreed to purchase the electricity from MHES
> Asia for a period of 21 years and the estimated value of the agreement was
> about RM13.4m p.a.
>
> The RE power plant developed by MHES Asia, which uses oil palm waste as
> biomass fuel will be located in Serting, Negeri Sembilan and will have an
> export capacity of 10MW to Tenaga. With the signing of the agreement,
> Tenaga has to date signed six renewal energy power purchase agreements
> (REPPAs) with a total capacity of 36.2 MW. This 10MW additional capacity
> is small relative to the industry's capacity of near 18,000MW. Albeit
> small, the signing of this agreement demonstrated the continuous support
> given by Tenaga for the success of the Government's SREP Programme.
>
> We are neutral towards this development amidst high reserve margin of
> approximately 40%. At RM13.4m p.a., we estimate this REPPAs' agreement to
> be worth approximately RM0.17/Kwh - 0.19/Kwh based on 80%-90% despatch
> requirements, slightly higher than current IPP's average rate of around
> RM0.15/Kwh. But we only expect marginal impact on the bottom line of
> Tenaga.
>
> Separately, it was reported that the general manager (distribution) of
> Tenaga in Malacca has been given a 48-hour transfer order out of the state
> following negative publicity in the past few weeks over its alleged
> failure to provide supply to several factories. We view this development
> positively as it shows Tenaga's commitment and ongoing restructuring
> process to rejuvenate the company, shed its old image and be responsive to
> customers' complaints. Hence, we maintain our Buy recommendation with a
> RNAV-based RM12.00 price target.