BREN and TPIA Have the Opportunity to Enter the MSCI Index

BREN will hold 100% ownership in Sidrap 1 and 51% ownership in Sidrap 2, Sukabumi Bayu Energy, and Lombok Timur Bayu worth US$17 million.

This strategic acquisition will increase BREN's renewable energy capacity to a total of 1,281 MW, with an effective capacity of 1,124 MW.

Read Also: Barito Renewables (BREN) Sets IPO Price at IDR 670-IDR 780

“BREN's move further strengthens its position as an industry leader and brings the company closer to its medium-term goal of achieving a large capacity of 2,000 MW,” Andreas revealed in a research dated January 24, 2024.

Meanwhile, TPIA is expected to have more infrastructure acquisitions in the future. As known, EGCO has invested US$194 million or equivalent to 30% of shares in Chandra Daya Investasi (CDI), a special purpose vehicle for infrastructure solutions.

Andreas stated that EGCO's investment makes the total value of CDI US$646 million. CDI will then increase its capacity to 300 MW from the current capacity of 120 MW.

“It should be noted that TPIA currently has a large cash reserve of US$ 2.3 billion which allows it to take advantage of strategic opportunities to acquire assets and transition into an energy infrastructure holding entity,” added Andreas.

The series of acquisition steps is expected to strengthen the fundamentals of BRPT's subsidiaries, especially BREN. This is because the shares of the Barito group are considered to have no growth prospects when prices soared high at the end of last year.

Just so you know, BREN once dominated the stock exchange by surpassing the market capitalization (market cap) of PT Bank Central Asia Tbk (BBCA) on December 8, 2023. However, BREN had just joined the Indonesia Stock Exchange (BEI) about 2 months ago, or precisely on October 9, 2023.

This view was previously also conveyed by JP Morgan, which sees BREN and TPIA shares not commensurate with substantial changes in their growth prospects. Thus, there seems to be no sustainability in the next 12 months.

"We do not see any significant changes in the growth prospects of TPIA and BREN. This will lead to a negative risk/reward for BRPT," revealed JP Morgan Securities Analyst Arnanto Januri in research dated December 12, 2023.

Arnanto predicts that the weak Polyethylene (PE) / Polypropylene (PP) spread will cause a slow recovery in TPIA's financial performance.

The PE/PP spread in 2024 is expected to be below the mid-cycle level at US$ 400 - US$ 420 per ton, driven by capacity additions and high demand.