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Maybank lauds Mega First’s Cambodian power project

Maybank lauds Mega First’s Cambodian power project

Maybank Investment Bank Research is positive on the progress of Mega First Corp Bhd’s (MFCB) transmission line from the Don Sahong Hydropower Project in Khong district in Laos’ Champasak province to Cambodia’s Stung Treng province.

On Tuesday, it said the line is expected to be completed by early December, in time for Don Sahong’s commercial operations in January.

“We raise our sum-of-parts target price by 15 per cent to five ringgit [$1.20] after adjusting for lower risks on completion of the line.

“Potential upside to our [fiscal year 2020-2021] forecasts having imputed for more conservative efficiency rates and margins at Don Sahong against management’s guidance. Reiterate ‘Buy’ on undemanding valuations of 7.8 times [expected fiscal year 2020] price-to-earnings ratio [-0.5 standard deviation],” it said.

Maybank Research said to speed up the process of channelling power from Don Sahong to Cambodia, Electricite du Laos (EdL) will port a connection from Tower 23 of MFCB’s newly-completed Don Sahong-Ban Hat transmission line straight to the Laos-Cambodia border.

EdL’s “interim” transmission line is expected to be completed in December.

Electricite du Cambodge is constructing a 60km stretch on the Cambodian side.

Based on the current progress, MFCB does not foresee any delays to the start of Don Sahong’s commercial operations in January.

“Wet testing and power transmission of the project’s four turbines will begin in phases from October 2019.

“The sale of energy during wet testing could boost [expected fiscal year 2019] core net profit by up to $8 million. Given this, we expect [the fourth quarter of this year] to be a bumper quarter.

“Additionally, costs for Don Sahong at the project level could be lower than the projected $401 million, partly due to lower-than-expected interest rates.

“If so, MFCB could book a one-off cumulative adjustment in [the fourth quarter of this year] to reflect its lower project costs,” the research house said.

THE STAR (MALAYSIA)

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