It was reported that Aeon Co (M) signed an agreement with GSPARX Sdn Bhd ─ a wholly owned subsidiary of Tenaga Nasional Berhad for the installation of solar PV systems. Under the agreement GSPARX will install and maintain a 77,000-kWP PV system at AEON Malls and AEON BIG nationwide for 25 years.
The first phase of the solar PV installation will be carried out at 11 AEON malls this year. Recall that the first
installation was completed in October 2022 at the Alpha Angle Mall in Wangsa Maju, which featured 1,513 kWP of
solar PV on the rooftop and a ground-level open-air parking lot. Note that Aeon has 28 malls as of FY21.
On this aspect, MIDF research is positive on the announcement as the successful installation of the solar PV system could reduce electricity usage by about 30%, which lowers the input costs and improve the margin. Note that the energy cost amounted to 5-6% of the total operating expenditure in FY22.
Based on its channel check, the agreement falls under TNB’s Self-consumption model, 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.
The solar PV system installation cost under the agreement is zero-capex, as GSPARX owns the solar PV system, hence Aeon incurs no costs for installing and maintaining these solar panels. MIDF said it learned that TNB will cover the cost of installation (RM3-4m) 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.
MIDF said it makes no revisions to the earnings forecast for FY23F-25F as management had previously highlighted its FY23
target to install solar PV systems in all AEON malls during analyst briefing.
AEON is also the top pick for the consumer sector as the house is optimistic about it FY23 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; and effective cost efficiencies to maintain the profit margin.
