Excerpts from CGS-CIMB report
Analyst: William Tng, CFA
|Light at the end of the tunnel
■ ISDN started its foray into the mini-hydropower plant business in Indonesia around 2012-2013.
■ If successful, the mini-hydropower business could be EPS accretive for FY22F-23F. Spinning off this business is also a possibility.
2 mini-hydropower plants commissioned
● ISDN’s hydropower plants in Anggoci (10MW capacity) and Sisira (4.6MW capacity) successfully passed commissioning last week and have been hooked to the municipal grid. These plants are in North Sumatra, Indonesia.
● The next step is for ISDN to obtain permits for full commercial operations, which it targets to achieve by end-2021.
● ISDN also said that the third mini-hydropower plant of 10MW capacity at Lau Biang continues to make good progress towards commissioning by the first half of 2022.
Additional earnings stream for FY22F-23F
● We have not factored in earnings contribution from the mini-hydropower plants for now.
● If the Anggoci and Sisira plants can be commercially operational by end-2021, these could contribute to our FY22F earnings forecast. Similarly if Lau Biang can achieve commercialisation by 1HFY22F, there could be 6 months of earnings contribution from this plant in our FY22F forecast.
● ISDN’s mini-hydropower business is held via its 67.1% owned subsidiary, AEnergy Holdings Company Limited (Not Listed).
● At 12.6x Singapore tech sector CY22 average P/E (unchanged), our TP remains at S$0.85.
● A potential re-rating catalyst is earlier profit contribution from its hydropower segment.
● A downside risk is a prolonged Covid-19 outbreak.
Full report here.