TNB REMACO new overseas contract a boost, says MIDF- 10 May 2017

KUALA LUMPUR- TNB Repair And Maintenance Sdn. Bhd. (TNB REMACO) bagged a new overseas contract worth US$176 million (RM736 million) for the operation and maintenance (O&M) of the 1,223 megawatt Balloki combined cycle gas turbine power plant located in the Punjab province in Pakistan.

       The contract spans over 12 years and was won via international bidding.

       “This is the largest O&M contract for a single power plant and will be a new benchmark for TNB REMACO in bidding for future for contracts.

       “TNB REMACO’s other O&M contracts in Pakistan are for the Liberty Power Plant, Narrowal Power Plant and New Bong Escape Hydro Power Plant.

         “The award comes shortly after TNB REMACO’s recent announcement to expand and set up its first overseas base in India,” MIDF Research said in a report yesterday.

         The Balloki contract is estimated to contribute an average RM64 million per annum to TNB’s topline (circa 0.1% of revenues).

     Although small, O&M is earmarked as one of the key units for overseas expansion riding on TNB’s aspiration to see 20% of earning contributed from overseas within the next eight years, the research house noted.

         “Overall, TNB REMACO is estimated to contribute RM1 billion or 2% to group revenue (and 1% t o group earnings) but this is targeted to almost double by 2020 to RM 1.9 billion revenue per annum.

         “While geographical expansion (especially Pakistan) is a key driver for TNB REMACO, we also do not rule out expansion in non-power sectors,” said MIDF Research.

        Currently, power sector clients contribute 90% of TNB REMACO’s earning with just 10% coming from non-power sector i.e. oil and gas.

        “TNB is a liquid proxy to gross domestic product growth outperforms and stronger trade, but its share price has yet to move meaningfully relative to the boarder market,” said MIDF Research.

Source from Malaymail