Summary of Key Points from the Investor Presentation on the Future of Energy Industry Overview - The presentation focuses on the energy and power markets, highlighting four key themes driving current debates in the sector [1][8]. Core Themes Identified 1. **Golden Age of Refining** - Fuel demand is outpacing new refining capacity growth, indicating a significant opportunity for refiners [15]. - The refining capacity is expected to see delays, with only 0.5 million barrels per day (mbpd) of net new capacity added annually until 2028 [17]. - Global fuel demand remains steady, with India, Europe, ASEAN, and the Americas being key drivers of incremental demand [19][20]. 2. **China's Anti-Involution** - China's policy actions are focused on rationalizing older, inefficient refining capacities, with a target to phase out 60 million tons per annum (Mtpa) of outdated refining capacity by 2025 [25][29]. - Approximately 0.8 mbpd of teapot capacity has been rationalized in the past five years, with a further 3 mbpd (16% of China's capacity) at risk due to these policies [29][31]. - China's fuel exports have been declining since 2024 amid lower operating rates and reducing export quotas [34]. 3. **Natural Gas: Fueling the Decade** - Gas consumption expectations are being revised higher, particularly in Asia, driven by economics, infrastructure, and policy support [49]. - Asia is projected to absorb a significant portion of US natural gas exports by 2030, with the region consuming one-third of global gas and two-thirds of global LNG [52]. - The US shale revolution is reshaping energy markets, with a similar dynamic expected in Asia due to increased LNG export capacity [58]. 4. **Powering AI** - Global power demand is expected to grow significantly, driven by data centers and electrification of industries, with expectations revised up by over 100 basis points globally [78]. - The demand for power in data centers is projected to nearly triple by 2030, indicating a substantial increase in energy requirements [85]. - Natural gas is expected to play a crucial role in meeting this growing power demand, particularly in Southeast Asia and Japan [91]. Additional Insights - The refining sector is experiencing the slowest supply growth since 2003, with strong demand recovery expected above pre-COVID levels in 2023 [15][19]. - Transport fuel margins have rebounded, and rising OPEC supply is anticipated to support lower crude premiums [22]. - The chemicals sector is facing a deep downcycle, with Asian chemical companies expected to regain market share lost to Chinese peers since 2022 [37][40]. - The focus on free cash flow (FCF) is increasing in the chemicals sector, with capital expenditure intensity cut nearly in half [43]. This summary encapsulates the critical insights and data points from the investor presentation, providing a comprehensive overview of the current trends and future outlook in the energy and power markets.

May 21, 2025 03:07 AM GMT China Utilities | Asia Pacific Takeaways from Energy Transition Trip We hosted a three-day China Energy Transition and Powering AI trip in Beijing and Shanghai, and talked with renewable experts on recent industry trends. Key Takeaways Regarding anti-excessive competition (along the solar value chain) efforts across the industry, Dr Tao (Deputy director from NDRC Energy Research Institute) noted that new and under-construction production capacity is now unlikely to commence operati ...

Investment Rating - The report assigns an "Overweight" rating to Tenaga Nasional (TENA.KL) with a price target of RM16.30, reflecting a 22% upside from the current price of RM13.38 [7]. Core Insights - The power market is expected to remain tight, but risks related to US chip exports to South Asia have emerged, prompting a reduction in the price target from RM20.60 to RM16.30 [1][5]. - Tenaga Nasional has experienced a 35% re-rating in 2024 due to higher-than-expected power demand and positive surprises in data center growth in Malaysia [2]. - The tightening of export controls on chips for China data centers and tariffs on Malaysian semiconductors pose risks to Tenaga's growth narrative, leading to adjustments in the cost of capital and long-term growth expectations [2][3]. Summary by Sections Price Target and Valuation - The price target for Tenaga Nasional has been lowered to RM16.30 from RM20.60, reflecting increased risks associated with slower power demand growth [5][37]. - The implied target multiple has been adjusted from approximately 20x to 16x due to anticipated slower growth in power demand [5]. Financial Performance and Projections - Revenue projections for 2024, 2025, 2026, and 2027 are RM65,835 million, RM71,203 million, RM73,352 million, and RM75,278 million respectively [30]. - Earnings per share (EPS) estimates for 2025, 2026, and 2027 have been revised to RM0.90, RM1.00, and RM1.09, reflecting a decrease of 2%, 4%, and 13% respectively [34][33]. Market Dynamics - Load utilization in February 2025 was reported at 700MW, indicating a significant increase from 400MW in December 2024, with no slowdown observed in the data center pipeline [4]. - The report notes that Tenaga's data center pipeline remains robust, with 39 additional projects in the application stage and 60 at pre-consultation [4][21]. Regulatory and Economic Factors - The regulatory environment is expected to support Tenaga's capital expenditures, allowing for sustained dividends at a yield of 4% and earnings growth of 6-7% CAGR, even if data center demand disappoints in 2025 [5][41]. - The report highlights that Tenaga's profitability is set to benefit from energy transition investments and a growing demand for power, particularly from data centers [16][41].