KUALA LUMPUR: Ranhill Utilities Bhd's growth projects, namely the Djuanda Source-to-Tap project in Indonesia and Ranhill SAJ Sdn Bhd's (RSAJ) solar farm, remain in the negotiation stage.
Maybank Investment Bank Bhd (Maybank IB) noted that the company's management is still working on securing approvals for the projects.
"For now, the investment thesis continues to revolve around the timing and quantum of a water tariff hike in Johor, which the cabinet has approved but the state has not implemented," the bank-backed research firm said in a note.
Ranhill's consortium has initiated the Djuanda Source-to-Tap project in Indonesia.
Feasibility studies are currently underway, with Ranhill expecting the process to take at least three months.
"The project will be put up for tender once approved (thus, the project cost is still fluid).
"Ranhill's consortium has the right to match any winning bids due to its initiator status," it said, adding that construction of the project will take another two to three years.
RSAJ has been in discussions with the regulators to construct solar farms for self-consumption.
Apart from emission reduction, the accompanying power purchase agreement (PPA) would also provide certainty to RSAJ's unit electricity cost, said Maybank IB.
RSAJ's electricity consumption totalled 314GWh in 2021, with a unit cost of 42 sen per kWh.
"We estimate 200MW is required for complete consumption matching.
"Assuming a 20 sen per kWh generation cost and a 12 sen per kWh grid cost, we estimate the solar farm could reduce RSAJ's unit electricity cost by 10 sen per kWh or RM30 million annually," it added.
The firm maintained a 'Buy' on the stock with an unchanged target price of 60 sen.