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Midf Research Positive On Aeon-tnb Solar Pv Installation Deal

(From left) Gsparx Sdn Bhd managing director, Elmie Fairul Mashuri; AEON CO.(M) Bhd deputy managing director Naoya Okada; AEON CO.(M) Bhd deputy managing director Tsugutoshi Seko; Tenaga Nasional Berhad chief retail officer Kamal Arifin A. Rahman; Tenaga Nasional Berhad chief strategy and ventures Datuk Megat Jalaluddin Megat Hassan and Tenaga Nasional Berhad chief customer officer Nasaruddin Bin Mohd Zaini. (Credit: AEON)

KUALA LUMPUR, April 13 (Bernama) -- MIDF Research is positive on Aeon Co (M) Bhd signing an agreement with Tenaga Nasional Bhd (TNB) to install solar photovoltaic (PV) systems at all Aeon malls and Aeon Big outlets nationwide.

The research house said the installation could reduce electricity usage by about 30 per cent, thereby lowering input costs and improving margins.

Aeon Co inked the agreement with TNB’s unit GSPARX Sdn Bhd to install and maintain a 77,000-kilowatt peak (kWp) solar PV system at all 28 Aeon malls for 25 years, with the first phase of installation involving 11 malls this year.

MIDF Research said the energy cost amounted to five to six per cent of the total operating expenditure in Aeon’s 2022 fiscal year.

“Based on our channel check, the agreement falls under TNB’s self-consumption model (Selco), with the initiative to generate electricity from the solar PV system to offset or lower the electricity bills.

“Under the Selco model, users will be able to use all electricity produced by solar panels, but any surplus cannot enter the utility network.

“This is often useful for buildings like shopping malls with constant daily electricity usage,” it said in a note today.

The research house opined that the installation cost under the agreement is zero capex (capital expenditure) as GSPARX owns the solar PV system while Aeon incurs no costs for installing and maintaining these solar panels.

“We learn that TNB will cover the cost of installation as part of its social responsibility to the environment and initiatives to motivate its customers to participate in its renewable energy programmes to meet the net zero target by 2050.

“As such, Aeon just needs to pay the monthly solar energy rate,” it said. 

MIDF Research made no revisions to its earnings forecast for the financial year of 2023-2025 as Aeon’s management had previously highlighted its fiscal year 2023 (FY2023) target to undertake the installation project during the analyst briefing.

The research house maintained its “buy” call and an unchanged target price of RM1.90, with Aeon Co as its top pick for the consumer sector.

“We are optimistic about Aeon's FY2023 outlook, which is supported by its initiative to expand a wide range of in-house private brands and labels at a competitive price, which can help boost sales as well as, effective cost efficiencies to maintain the profit margin.

“Besides, we are optimistic that the group will benefit from the increasing out-of-home activities following the reopening of borders and the economy,” it added.

-- BERNAMA

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