Tenaga Nasional Berhad (TENAGA) Earnings Call Transcript & Summary

Ladies and gentlemen, for those who are already here in the hall, we would appreciate if you could help us fill up the front row. Thank you.

Ladies and gentlemen, thank you for joining us here physically and virtually viabx. To begin our session, let us watch a brief safety video to ensure everyone is well prepared for any potential emergies.

Good evening, everyone. Thank you for joining TNB's Second Quarter FY 2026 Analyst Briefing. A very warm welcome to everyone of you joining us here today. Dato Engine Technologies Shamsul Ahmad, President and Chief Executive Officer of Karaba National Berhub; our Chief Financial Officer, Mr. Badrulhisyam bin Fauzi. I would also like to warmly welcome all of you joining us here today. We also have 60 attendees joining us virtually via web. Today's session will be covered in 2 parts. Firstly, our CEO, Dato Shamsul, will provide an overview of TNB's second quarter FY 2026 performance, group strategy and outlook, followed by our Chief Financial Officer, Mr. Badrulhisyam will present on details of 's second quarter FY 2026 financial performance. We will then open for Q&A before we end the session at 6:00 p.m. With that, I'm pleased to invite Dato Engineering Technologies, Shamsul Bin Ahmad to kick off our session for today.

Thank you, A very good evening to everybody, and thank you for joining us today. Everybody must be wondering it's Friday afternoon at doing a business analyst briefing to all of us. Is there a catch for doing that or not? There's nothing that we are going to hide from you. We are going to be very transparent today. And it's just that I'm traveling from Quanta this morning for our new PMU 500 kV from Paka to Kal. So that is another milestone as part of our expansion in improving and enhancing our grid expansion. First and foremost, let us share some of our key performance highlights for the first half of our financial year. And we are glad to inform you that we delivered a resilient performance underpinned by strong operational execution across our key business pillars. On a normalized basis, adjusting for ForEx translation and IFRS 16 impacts, our core PAT reached MYR 2.3 billion. Our regulatory CapEx momentum remains firm with MYR 5.6 billion deployed into grid infrastructure to support accelerating electricity demand and enable our ongoing energy transition road map. And building on this stability, we are pleased to declare an interim dividend of MYR 0.35 per share, representing 63.2% payout on adjusted PATAMI. This demonstrates our continued commitment to delivering sustainable returns to our shareholders while maintaining financial discipline. So turning to our operational backdrop. Electricity demand remains excellent throughout the first half, primarily expanding commercial sector. This structural demand growth was demonstrated earlier this month when system peak demand scale consecutive historical high, reaching 22,014 megawatt on 6 August 2026 and surpassing the previous record of 21,827 megawatts set just 3 days prior. This record peaks underscore the sustained growth in electricity demand across the country. On excellent execution, our clean energy road map, we achieved 2 key RE milestones. So one is actually first TMD bouquet Kulim Solar achieved COD, adding 45 megawatt peak to our operating RE portfolio. And Dinawan Energy Hub was awarded the capacity investment scheme, strengthening our future RE pipeline. We successfully hosted the TMP Energy Transition Conference, EPCO36, convening over 6,000 delegates and industrial stakeholders. This one of the major and good event that organized by us. More importantly, the platform catalyzed 15 strategic partnerships, cementing TNB's position as a preferred regional energy transition partner and unlocking long-term opportunities across grid modernization, clean generation and cross cross-border interconnectivity. And overall, our first half performance demonstrates continued resilience across our core business while we remain focused on expanding our renewable energy footprint and advancing the energy transition. So building on our core demand momentum, total electricity units sold grew by 8% year-on-year. This growth was anchored by the commercial sector, which now comprises 39% of total sales volume. Commercial demand expanded by 13.7% year-on-year, driven by data centers, shopping malls, businesses and accommodation-related services. So looking specifically at the data center segment, actual energy consumption from operational data centers has more than doubled year-on-year, surging from 1. terawatt hour to 4 terawatt hour. Furthermore, load ramp-up continues to accelerate with demand reaching about 1.26 gigawatts as of June 2026, indicating highly predictable volume scaling. While data centers represent our fastest-growing load category, they currently account for relatively small 6% of total sales, highlighting the underlying diversification and resilience of our broader customer base. Building on the strong momentum in actual data center consumption, let us look now at our secured pipeline and where this growth is concentrated. As of June 2026, our secured pipeline stands at 61 projects, representing 8.35 gigawatts of maximum demand. Of these 42 projects representing 5.65 gigawatt and are already in the system with actual load utilization reaching approximately 1.26 gigawatts. This secured pipeline is progressively translating into actual electricity demand, providing greater visibility of sustained demand growth. And JohO continues to strengthen its position as a leading regional data hub backed by distinct competitive advantages in the land and power infrastructure as acknowledged across the industry. We will inform JOhO is actually the biggest data center clusters actually in the world, and where Malaysia is actually one of the top 10 data centers clusters actually around the world. That augurs well when it comes to data center business coming to Malaysia. And as this project continues to progress into operations, our focus remains on ensuring grid readiness and reliability supply while maintaining disciplined capital deployment and working closely with data center developers, right? Turning to our technical performance. Our disciplined operational execution throughout the period -- throughout the period directly underpins our core earnings resilience, providing a highly reliable foundation for the group's broader financial performance. Generation has turned around and become now has produced a good performance for the first 6 months where equivalent availability factor have improved to 87.9%, up from 86.1% last year. And the operational uplift reflects enhanced plant availability and proactive fleet maintenance. Turning to transmission and distribution. Network performance remained firmly at world-class benchmarks, ensuring grid stability and seamless power delivery despite expanding peak demand. Specifically for distribution, our SID tracked at 23.45 minutes, well within our internal threshold of 47 minutes. This performance highlights the structural resilience and operational readiness of our network. Overall, the group's strong technical metrics reinforce our earning quality, operational stability and ensure we are fully equipped to serve accelerating national electricity demand while enabling the nation's energy transition agenda. So moving to our strategic partnership. We continue to expand our beyond kilowatt hour and integrated energy footprint through a high-impact long-term commercial collaborations across clean energy, grid infrastructure and energy efficiency solutions. And in June, we hosted, as I mentioned earlier, our second TNBET conference. It is truly a proud moment for all of us. And beyond combining these key regional stakeholders, the platform serves as a major commercial catalyst culminating in 15 formal agreements. These span renewable generations, cross-border power integrations, grid developments, gas infrastructure and technical capability building. And highlighting some of them are our partnership with Day 1 to supply renewable energy for its data center operations under the CRES scheme. And we have also collaborated with PETRONAS for the regasification terminal of RGT 3 in Lon and through SPA GC Sparks, our subsidiary, we have secured a 25-megawatt peak rooftop solar project with EV Energy. This represents G-SPAC's largest single rooftop solar project to date. We also continue to expand our integrated energy solutions through clean -- through recent partnerships with UNIIlaya and ISlango. First, GNEC signed a 20-year cooling energy supply agreement with UNIIlaya to modernize the cooling infrastructure at the UM's Wisma R&D. This demonstrates our capability to deliver reliable and cost-effective solutions that improve energy efficiency and support sustainable campus development. And we also signed a landmark dual agreement with Icelango to enhance the reliability and efficiency of Malaysia's critical water infrastructure. These agreements are electricity supply agreement for TMB to supply 180 kV power to the Sunae Rasa water treatment plant and 20-year cooling energy supply agreement. TNEC will provide gas district cooling services to Icelango's facility. So collectively, these strategic alliances strengthen TMB's position as an integrated energy solutions provider while creating long-term value beyond conventional electricity supply. And moving to our nonregulated growth pillar, we are advancing a robust and diversified generation pipeline comprising about 12.7 gigawatts of projects under construction and developments through 2033. In the first half of this year, we will commission an additional 3.5 megawatts from Unit 1 of the Sungai Pera Hydro expansion program and our large-scale solar project in Sabah. Our commissioning trajectory accelerates in 2027, adding nearly 1 gigawatt of RE capacity via Nigeri Hydro and large-scale solar 5. And this will be followed by over 3 gigawatt peak in 2028, anchored predominantly by our flagship NETR developments. 2030 will mark a pivotal year as we commercialize our 3 gigawatt of diversified capacity spanning solar, hydro and wind assets across both our domestic and international portfolios. So as we scale this high-efficiency clean capacity, KMB is executing a disciplined phased decommissioning strategy, retiring about 6.6 gigawatts of legacy assets by 2030. This allows us to progressively transform our portfolio, keeping an option and aligned with the energy transition while safeguarding the grid stability and customer supply reliability. And looking beyond our committed pipeline, CMB remains strategically positioned to capture high-value accretive growth opportunities that align with the measures long-term demand growth and decarbonization objective. And the government recently unveiled 2 major national programs. First, the LS6 program, targeting commercial operations by December 2029. We are currently assessing our participation based on its strategic fit and commercial viability. And second, the new Gen 26. The government is posing new combat cycle gas turbine capacity of high-efficiency combat cycle block for Peninsula Malaysia to operate between 2029 and 2031. And we are pleased to inform to report that we have submitted our proposal on 1st of July 2026, and we hope we will win the bid. Together, this initiative ensure TMB is well positioned to secure high-quality generation growth, reinforcing national energy security and drive long-term shareholder value creation. With that operational and strategic overview. I will now hand it to our CFO, Badrulhisyam bin Fauzi, who will walk you through a detailed background of our financial results for the first half of this year. Thank you, Badrulhisyam.

Thank you, [ Reto ]. So we'll go into some of the slides to cover the financial highlights for our performance for the first half 2026 where you have seen that the numbers are quite good in the sense that the profit remains stable, and this is actually driven by overall solid performance across all our business units. So if you look at the revenue actually has grown by 7.5%, adding additional MYR 2.5 billion of additional revenue coming mostly from growth of electricity demand, as earlier explained by the driven mostly by commercial sector. And of course, data center driving a lot of that demand very strongly. But most importantly, if you look at our EBITDA, it has also increased around MYR 509 million to MYR 10.8 billion for the first half of 2026. Granted, we have that EBITDA margin slightly lower at 30.8% compared to last year. But this is also the fact that we are definitely not spared from the cost pressure that is actually everywhere in the current business climate. But we believe that this is being mitigated. We are looking at very -- we are looking at various ways to contain this cost and this is actually not far off from our number in 2025, which was around 31.6%. So we believe that at the end of the day, absolute amount of EBITDA is actually still growing. That shows that there is a positive momentum as far as the earnings of the company is concerned. And most importantly, when it comes down to core PAT, after adjusting for ForEx and MFRS 16, we actually improved the core PAT by 5.3% recording MYR 2.3 billion for the first 6 months. Granted, if you look at some of the news report as well, the reported PAT is actually lower because of the absence of the ForEx gain of almost MYR 370 million last year. That's why we believe that the more reasonable number is the core PAT. And if you drill down into the numbers as well, this year, we do have lower finance income by almost MYR 160 million as a result of this optimizing our cash balance on the face of massive CapEx last year and this year. And of particular interest to all of you as well, if you look at our effective tax rate for this year, for the -- so far, on the 6 months is at around 29.3%, which is just slightly lower than 29.8% that we recorded last year. And as mentioned earlier as well, in the first quarter, the rationale -- I mean, the more moderate effective tax rate that we are targeting would still be around 24%, but that would only realize closer in the quarter 3 and quarter 4 as we finalize all the incentive that's being available to TNB. And I've also noticed that in some of the ports that have gone out by the analysts today, there was also a lot of focus on our Danco unit. So I'm pleased to actually confirm that as far as we are concerned, Genco is actually performing very well this year operationally. But financially, we urge you to look at the numbers in terms of the whole 6 months, not just quarter 2 alone because, obviously, there are there are some nonseasonal item in quarter 2, but we would like to confirm that there is no major one-off during the second quarter, but we do have a bit more higher one-off costs in the in particular, 2 items, we do have -- operationally, we have minor demolition work in our Pasigudang and Putrajaya and we do have a minor combustion and inspection exercise in price in quarter 2. So that actually is part of the normal operating business for Genco. But most importantly, if you look at year-on-year, the net energy generated is 10% higher year-on-year. So for us, it's about looking at the longer term rather than being too worried about 1 single quarter performance by Genco. And you have seen that as far as the 6 months number are concerned, it's tracking very positively. So in short, we believe that the overall performance reflect the fact that increase in sale of electricity higher consumption from commercial sector actually has improved the copy of the company, which is accompanied by improved operational profitability across all our businesses. So if we look at into capital management side of the company, obviously, we are focusing on 2 important things. The first 1 is the working capital management as well as making sure we have proactive funding arrangement to make sure that we are able to utilize our strong credit profile to raise funds at very competitive costs. So if you look at capital management from the trade receivables side, we ended the first half year '26 at MYR 4.7 billion, which is actually lower than MYR 4.8 billion that we had 6 months last year despite that we have much higher revenue. So this is actually granted. You can say that it's higher than March and December 2025, but the seasonality do reflect that by the end of the year. Obviously, a lot of our receivables are settled. So that everybody can show a nice P&L at the end of the year. So we do expect that seasonality to happen. But as far as collection is concerned, at MYR 4.7 billion receivable against a much higher revenue compared to last year. This is a manifestation of the fact that we have now a very comfortable proactive credit management of our receivable where they are well below 30 days as far as receivables are concerned. And if you drill down further into regulatory receivables, this is even better in the sense that at the end of last year, we had MYR 1.9 billion of regulatory receivable. So I'm pleased to report that actually as far as ICPT for April to June 2025 of MYR 1.3 billion was already received in March 2026. So that amount actually has gone down to less than MYR 1 billion as of June, and there are only 2 big components. We have been enjoying a far rebate all the way up to until April 2026 before the fuel cost dictated that there is a upper surcharge coming from me. And the government actually has decided to come in and sell the right year from the full brand of this elevated fuel cost. So that actually is the first time that we are using -- I mean government is utilizing Quezon to share part of the AFS impact. So that's why we are claiming it from Ku already, but the process because this is the first time we are starting this. So the amount from May and June has already been claimed and July is coming soon. So the amount is being processed in the beginning. So that's why it's a bit slow at the moment. But once that mechanism is finalized, it will be monthly payable to TMB. So you will see a much lower amount from that. So that's 1 part of it. And we also have around MYR 370 million of OP from year 2024, which half of it was already received already by now in July. So once this mechanism are in place, you will be able to see that the regulatory receivable will be much lower. So this is also the beauty of RP4 where under the new tariff mechanism. A lot has been done to make sure that TMB would be sheltered in terms of the cash flow lease from the uncontrollable factor. So that's very important. So if you look at the next item on AFA, as mentioned just now, almost MYR 400 million actually still to be recovered. But again, like I said, this is only a small portion of the overall cost pass-through. So a lot of it has been passed through the consumer where TNB has been able to recover a lot of it from a monthly basis. only the 1 that is coming from Que that's a bit delayed in this sense because the early days governmentation. But this is also the fact that government has -- is making sure that yet is not too affected by these current high elevated prices. So if you look at funding, obviously, we have been an active issuer in the market this year. We have actually issued MYR 6.55 billion at current relatively low rate, making sure that we lock in our current borrowing at this kind of level over the next 25 years to match with our asset profile. So if you look at the first one, we already issued MYR 4 billion for TNB that is maturity between 7, 10, 15, 20 and 25 years. That's very well subscribed with blended average rate actually at around 4.22%. The second 1 on the subsidiary. This is very unique. This is for our LSS 5 plus and TNB renewable. This is very unique in the sense that, yes, it's just slightly above MYR 1 billion. We can probably get many banks interested to give us term loan, but we actually went with SRI to Goa Cola, where we actually issued maturity of every year. So it's like amortized loan but so cool. So investors actually a big tenure of 3,4,5,6, 7, 8, 9, all the way up to 19 years. But we did that because of the appetite for very clean renewable Suku. So we got a very good rate. So the blended led between 3 to 19 years is actually 3.99%. So that's very competitive. And the third 1 under TNB Genco, we had our issuance of MYR 1.5 billion. This is mostly to finance an angry hydro project as well as per life extension. Again, that 1 is we don't want it to be short term because this is long-term PPA, 20 to 40 years. So we issued 10, 15, 20, 25 and that actually got a blended rate of only 4.17%. So you see that as far as borrowing is concerned, we must make sure that we are able to lock in a good rate at our long term. And that's why today, we have a competitive rate of cost of borrowing of 4.65% and 96% of that amount are fixed long-term late. So in the event that there is up cycle of higher interest rate coming over the next many years, we would not be exposed under that environment. So we must be able to continue in doing this to make sure that we have a disciplined financial management so that we are able to continue having a strong credit rating as demonstrated by a ramp that has maintained our AAA rating. And yes, they are aware of our massive regulated asset investment case, but they're also aware of our massive investment in the generation power plant, but they are convinced that as far as these new additional borrowings are concerned is for productive and profitable usage. So this is also showing that we do have enough capacity to support the investment that we need to make over the next many years. And if we move to the next 1 to what we have done so far, Obviously, if you look at our CapEx for first 6 months, we have spent MYR 7.1 billion, and you will notice that out of that. A lot of it is actually to strengthen our grid resilience as well as advancing our clean energy capacity on the nonregulated CapEx. So if you look at our regulated CapEx that we will spend already this year, that's MYR 5.6 billion. That is more than last year's delivered at around MYR 4 billion. And if we look at our base CapEx, in particular, that is already last year, MYR 10.6 billion, plus this MYR 5.6 billion. We are already at around 58% of the Arbor base CapEx of MYR 26 billion. And if you look at the contingent CapEx, yes, we spent last year, MYR 1.7 billion this year, another MYR 740 million, but we are not really concerned about the mix between the 2 animal. So as mentioned in the first quarter briefing as well, you should focus on the total regulated CapEx, both base and contingent because we are on track to deliver the MYR 13 billion regulated CapEx this year, which will reflect in our income irrespective of base or contingent. So if you look at what we have spent this year MYR 5.6 billion, we can categorize it into 3 main categories: security of supply, MYR 2.6 billion to cater for demand growth, MYR 2.3 billion. That will be all the data center that CEO mentioned just now. So all those needs to be strengthened to make sure that we are able to supply those and around MYR 600 million was spent on energy transition. So sometimes, it's very difficult to get a color of exactly what are we spending on because you're talking about the grade. So today, we are lucky CEO was saying he just came back from the PMU in Kampo. That's our 500 kV line. So that is groundbreaking ceremony. I've seen the photos of with the shops now putting the ground away. So in the next few quarters, you'll be able to see PMU Campo our in the CapEx that we do under network reinforcement. But so far in the first quarter, in the first half, that will be the 1 that we did in Selene and SuricandaWest, plus the upgrade of our glanceable from Pantai to Salad South. These are specific major project, but actually, it's a lot more with smaller projects across the country where we do proactive asset replacement initiative to make sure that the network are able to deliver the number that you see just now, 0.001 minutes and all. So these are effectively being done all the time. and you've got specific projects, for example, this year, ECRL, where we had 10 feeder station supplying 132 kV supplied. So that is already 97% completion. And on energy transition, obviously, we have our flagship Santong battery energy storage system that was already operating since the second quarter of this year. And if you look at the sum of the energy transition project that we're doing, smart meter, which is a key project for us to enable time of use for all our customers. Year-to-date, we have achieved around 351,000 meters installed. That would be a target this year is around 1 million. So by the time we finish year-to-date, that is already close to 6 million customer having smart meters. And of course, we need also on our distribution network, we are actually investing in distribution automation to make sure that we are able to reduce time remotely to ensure supply reliability. And so far, 53% of the targeted work have already been completed. So I'm dwelling a bit more here so that the communities actually understand that, yes, it may sound big MYR 7 billion, MYR 5 billion and all. But if you break it down, there are key components and team that we are delivering across these 3 pillars to make sure that we are able to support the demand that is coming in. And on the other side of the slide, if you talk about nonregulated CapEx, yes, investment in the grid and the regulated business is important, but nonregulated CapEx is equally important to make sure that at the end of the day, there is power to be delivered over the grid that we are upgrading. So, so far, we spent MYR 1.5 billion already for the 6 months, and this is on the future growth platform. So you've seen that Gerhydro project that CEO mentioned just now, that 76% completion already ready for operation in second quarter next year. We've got this 1 para, 36% already the first unit coming on stream by year-end. And the 1 that we did a financial close just now, that is LSS 5 that 686-megawatt peak that is on progress, so we can start construction that funding is already in place. And 1 of the project class that CEO mentioned just now, we signed around 1,050 megawatts of class project with day 1 that split into 2 the first 500 megawatt, which is a 5-megawatt big is the hybrid hydrofloating solar can, which is progressing very well, where EPCC has already awarded. And hopefully, the next quarter, we should be able to tell you that the 500-megawatt ground-mounted solar would also be coming on stream. So these are all part of the massive generation capacity that's coming on stream over the next many years as detailed out by the CEO in the previous slide. So yes, that's pretty much hopefully the details of what we have spent and invested on over the pens. Obviously, if I don't talk about dividend, all that I mentioned just now would matter much to all of you. So we are pleased to actually shows that as far as the performance of the company is concerned, we are maintaining the absolute amount of MYR 0.25 dividend payout to reward our shareholders for the first 6 months. and at MYR 0.25, yes, that will be similar to what we paid interim dividend for '24 and '25. They worry so much about the payout ratio, obviously, because as far as the company is concerned, that is not much off from the 60% payout. And we do expect to sustain the current trend of dividend payment, which will be determined by the end of the year when the full year numbers are in place. So with that, I pass back to CEO to talk about the outlook and guidance for the rest of the year.

Okay. Think about -- so ladies and gentlemen, the last 3 years, it has been very exciting to us and also to the whole ecosystem, plenty of citing things happening, driven mainly by the energy transition. And we also see that things -- many things have been driven by the robust macroeconomic fundamentals that accelerate load expansion and increased demand from data centers, especially. And we are revising our electricity demand growth upward between 5% to 6%. And this is line with Malaysia's projected GDP growth of 4% to 5% this year. To support this expanding electricity demand and as ever, our strategic decarbonization commitment, we maintained our total group CapEx deployment for the year to be approximately MYR 18 billion. Of this MYR 13 billion will be allocated to our core regulatory business, with the remaining MYR 1 billion will fund for our nonregulated growth pillar. As we deploy -- this growth capital remains anchored to strict financial discipline. We will actively optimize our capital structure, leverage competitive funding sources and reserve robust balance sheet liquidity to safeguard our investments investment-grade credit ratings. And finally, underpinned by our resilient operational cash flows, we trade out from an our established dividend policy, delivering consistent, sustainable distribution and long-term value to our shareholders. Alongside delivering sustainable shareholder returns. Sustainability remains fully intermitted into our long-term value creation strategy. Our focus is to expand our core business while supporting Malaysias energy transition and solidifying TNB's position across the evolving regional energy landscape. In line with this commitment, we have published our latest sale report, which is very big in nature, a very heavy close to 2 kilograms report, just to impress everybody how serious we are in ESG, which highlights our group progress key operational milestones and ongoing initiatives, we submitted 2 reports on the subpayment almost 100 pages and report also close to 100 pages. So everybody said, why is your ESG, you printed almost close to 2 kilograms of report. So okay, probably last year, we'll do it better. Okay, limited printing the okay. I've been -- he always correct me on Monday is my we own my CSO. With that I'm glad that -- so this is a presentation I made to you very honest, very transparent, and I hope there will be a lot of questions and answers after this, and we do look forward for your continued support and attention. And to that, I hand over back to you, Edwin.

All right. Thank you, Shamsul and Mr. Badrulhisyam for your presentation just now. Let us now move to the Q&A session. We will begin by taking questions here from the attendees in the room followed by those joining us on WebEx. With that, I open the floor for questions. [Operator Instructions]. Kindly introduce yourselves and share your questions.

Just remember this is Friday afternoon. Daniel Wong from Hong Leong. A few questions there. First thing is on you regular CapEx you guided MYR 13 billion for the full year and then MYR 5 billion for the nonrelated. But your first half only done 5.6% for regulated and MYR 1.5 billion for nonregulated. So we are specking all this to assist towards second half of the year. Another question is that on your MYR 5.6 billion regular CapEx already spent, how much of it actually part of the so-called contingent CapEx. If it's already spent on the content pack for your first half, has this actually started to flow into your first half earnings?

The short answer to the first question. Yes, I have my senate new officer here, who are very committed, and they do tell me that they work better under pressure. So they will deliver the number according to the plan. So yes, internally, we have guided for this MYR 13 billion unlike weighted CapEx for the first quarter. And we know that the first half, we have only delivered MYR 5 billion of that. But a lot of it in the normal construction project, you do spend a lot of time building the foundation and the groundwork to make it moving. But the once it gets moving, you get to progress very quickly. So we are confident still to deliver the regulated CapEx, in particular, according to that progress. And yes, as far as regulated CapEx, much lower but those are tied to the commitment that we have in terms of COD of those projects. So we will be delivering that. So if you notice our guidance for CapEx second quarter and first quarter has not changed. Internally, yes, we had the same question. Based on 6 months progress, can we do it towards the end of the year? And the answer that I got was yes, and we will deliver this CapEx this year. As far as contingent CapEx recognition is concerned, yes, so far, MYR 700 million of contingent CapEx has been recognized this year. And yes, it has already flowed into our income for 6 months this year already, that's around MYR 160 million already.

Sorry, MYR 160 million PAT at the bottom line for peso?

Yes. So if you exclude this one, basically, your earnings generally grow I mean first half comparative first half last year, if you exclude this continued CapEx earnings, which additional year-on-year basis, we wouldn't have much Yes. I mean, we look at it, that's why I said as far as we are concerned, we look at the regulated earnings overall first 6 months this year against 6 months last year, which is growing as a result of both base and contingent CapEx. So it is growing. So that's what contributing towards the overall core PAT growth of that growth.

Okay. Just to make things clear here, but you guide the CapEx spending of MYR 13 billion is based on cash flow, right?

Capitalized under accounting principle so that it goes into our regulatory financial statement, then the regulator can approve that amount is due to us.

Differentiate -- you've guided MYR 13 billion for this year, you may get italized. When you say capitalized risk already approved or already signed up by Canyon, but cash flow may not go out yet?

No. Well, cash flow, you've got the cash flow going out and some of them goes under, what we call, work in progress. So the project needs to achieve certain milestones. Of course, if you see Odonil, but you've got a certain milestone before you are able to capitalize it. So once you capitalize it, then you can earn the return on base and contingent CapEx. So -- but this is like ongoing all the time. So you've got projects are being spent and being capitalized. So it's a rolling numbers all the time. But what we are guiding is what we were going to capitalize under the balance sheet, which will be tied to the earnings that we're going to get, which is 7.3%.

So if a project -- okay, for example, if the project is halfway this quarter and have we done WIP for imports, only done by 70% and then the engineering contractor already say that it has been done 70%, but I have not seen it yet, but you actually start to recognize this earnings. You still have to wait to see all the first of the project, right?

But that's when I showed the project is now under the network side, it's very, very unique in the sense that you really have to define 1 project on its own? Or how do you define it? Let's say you're building a capable between 2 PMU that's 100 kilometers long. So you can say it's 1 project you need to wait a meter but you can capitalize or if you award it under 2 package, 50 kilometers, 50 kilometers, 150 kilometers year, that's 1 project that you can capitalize already. So there are a lot of nuances to it. But what we're seeing is yes, it has to be capitalized. And what we're guiding is what will go into our balance sheet.

I see -- and then my follow-up question is that on -- for the next 2, 3 years, undertone RP4, has actually allocated some of the budget for the Assangridor we can only expect that Asa Captain 2028 or RP5.

We better use the manual one. It's a lot -- what -- there are some CapEx being allocated RP4 but we will not be covering the whole project of APG. For example, there are CapEx for land acquisition, which has been actually budgeted under before. So there will be some minimum CapEx allocation that you will -- we will see before RP4 IBR period. But it's not totally the whole project data. So it depends. For example, for the project Land acquisition is 1 of the key that we need to do it fast, then it allows about 200 millions over there for the land acquisition. That's 1 -- those are the same -- the things that we see under RP4. So the likelihood is actually when we go under RP5, there will be a slightly major allocations under RP4, simply because there's a lot more clarity in terms of the project, okay? Meanwhile, it has bare minimum of allocations being located under RP4. Okay. Any more questions?

One question. Max from RHB. Max, yes, can you share in terms of the new ESA that was signed in first quarter and second quarter. So I just want to get a sense of how -- what's the progress? And if I check -- if I remember, if I see the slides correctly, I think it's about 0.9 gigawatts, right?

0.5 gigawatt, 5 ESAs so far.

So what 5 years is so far. So what's the split between 1Q and second Q.

Kamal, do you want to take that one? The new assay signs between 1Q and second Q.

Currently for the first half of the year, we have signed 5 ESA, which is totaling about 862 megawatt. So we're actually projecting 11 throughout the whole of the year. So we already have through right? I'll give you the detail with respect to first quarter and second quarter okay?

This is Isaac from Affin Hwang. I have 2 questions, please. And number one, just now you have shown your plans for the capacity expansion over the next couple of years. I know that those new power plants subject to further approval from the Rajan Tenaga. Is this going to be under the current new Gen 6? Or is that like a separate.

Okay. Just to answer you, Isaac. All projects must be provided to Rajan and also by trial. So what the process is actually they issue you an initial letter of notification. For you to do the necessary preparations. Once you see that, basically, the project is given to you, but you need to comply to certain governance regulations or policies and procedures of the government. Then after that, we need to submit for levelized tariff and some negotiations with ST, then you lock with it. So there's plenty of exciting projects because we see moving forward until 2021, 2022, there's a good growth in the solid demand whereas -- and what we see is actually our existing facility remains the same all right? So there is reason to actually plant up quickly in order for us to meet those rise in demand. And that is where NatGen 26 has been recently been floated. And you see LSV come into the picture also, which is supposed to be closed sometime in November, if not a second. The next gen 26 also is supposed to be closed sometime in November. Correct me if I'm wrong, sorry, next gen 26. I mean Bob -- so everybody is talking about November to cash to cash 2030, 2039, 2050, 2051 growth. So we bid for NextGen '26 an Opole gasoline commercial gas turbines, and there are quite a number of other participants also. So they are all lined up to meet that expected demand due to the rise in of the electricity growth.

Sure. I think you have secured some of the loans already for those you have flash out maybe the Capa, the market repowering.

Okay. We received a number on energy, but I want to really excite the whole market because until we really. Okay, we received loan for [indiscernible]. Can I see a probably Okay. So we received an ion for Macau, aka, 14-part Macau. I learned for Pact coming I learned for Paka coming, Lon for Pakco we received already, right? And that is 2008. So we received an iLoan for our pump storage Oluji of 700 megawatts. And we also accretive Kappa iLoan for 2,100 megawatts. There is a conform Ilan and Landa we have received on all. So that 1 probably aspect closer about more than 50 over the next 5 years, that we'll be spending our CapEx.

Yes. All right. Just another question. I guess is on the crest versus the LSS. So I see that you have both -- so in term of the preference, is there any particular -- which 1 of these are you prioritizing? And in the day 1 deal that you have who is -- who will be bad for the fluctuation in SAC. Is that your part or is that the part.

Gary, you want to take that? This is my expert on Crest and lesion.

Thank you for the questions. On the first one, whether do we prefer Crest or LSS, short answer is no. Right, both offers opportunities in terms of benefits and return. On the CRS, I'm not sure what it is public information, but there is a risk transfer that we have agreed, and most of it will be borne by the offtaker.

So that's -- what do worry about a PC cannot go up, it can only go down. So always, I don't out. Okay. Please don't quote me I hope that the Okay. Anyone Yes.

PYes, it's Colin from Macquarie. Just wanted to understand a bit on the regulated CapEx side of things. Because you're saying the base CapEx and continuing CapEx would you just look at it as we 1 item, regulated CapEx, right? But just going to 2027, which is the last year of the RP4, how would that look like your regulated CapEx? Would that be on a similar level? Or if should we expect more contingent CapEx to ramp up significantly as a result color some of that.

As mentioned, just if you look at our base CapEx, with MYR 4 billion that we spent this year and MYR 10.5 billion we spent last year, that's already 58% of the MYR 26 billion base CapEx. So we have a 3 years CapEx spend for regulated if we have guided that to be at around 70% to 80% of the allocated MYR 43 billion. So last year, we spent MYR 12 million. This year, we're guiding for MYR 13 billion. So you need close to another MYR 13 billion, 14, 15 in next year. So yes, contingent CapEx has to make up most of the CapEx in 2027. And that's much easier to justify because of the fact that most of the base CapEx will have already been spent already. So when there is demand, there is supply, and there is the need for energy transition to cater for all these LSS projects and class and all. So that's how we are positioning it so that we are able to get timely approval for the contingent CapEx. So it has to come in because of the demand because of the energy transition needed to cater for the solar projects, yes.

Any more questions, please?

This is [ Noah from Kazan ]. Just a question on Genco. You mentioned that we should look at the first half results rather than quarter-on-quarter. And you said that 10% net energy generated year-on-year. How do you expect that performance for Genco for the rest of the year on net energy generated.

Genco you want to take or do you want me to take.

[indiscernible].

We'll see a very strong performance. I'm very happy to look at the performance of Genco tier. We have turnaround organization. We're hitting the numbers we would expect to hit. And -- and I'm really hoping that with a strict discipline of doing the necessary maintenance. The sales, the megawatt sales out of Genco is going to be very consistent towards the end of the year. There will be purchase of my maintenance here and there. But overall, on cross my fingers that nothing will happen big time. Small things do happen from time to time, but no major incidents that we're going to see a very strong performance from Genco in Chile, right Thanks.

Hazmy from CLSA. Just a couple of questions. Just on cost items. I think in the second quarter, we can see some elevated bit, I mean, of course, on the field OpEx, but I also want the nonfuel OpEx part, can you comment a little bit, especially surrounding any staff, IT costs and all that. Will it still remain elevated going into second half? And if there are any details about that.