Malaysia's Genting to sell power assets -paper

KUALA LUMPUR, May 28 (Reuters) - Malaysian leisure company Genting Bhd (GENT.KL) plans to exit the power generation business and Tenaga Nasional Bhd (TENA.KL) has emerged as frontrunner to purchase the energy assets, a newspaper said on Wednesday.

The Edge Financial Daily quoted unnamed sources as saying the price for Genting's power assets, which include plants in Malaysia, China and India, had not been decided but could exceed 3 billion ringgit ($938 million).

When contacted, Genting said it could neither confirm nor deny the report, while Tenaga said it plans to respond later.

The paper added that dominant power distributor Tenaga is among several local and foreign parties that have expressed interest in Genting's power plants. The other domestic power firms said to be interested are Malakoff Bhd and Tanjong Bhd (TJPL.KL)

It added that Standard Chartered private equity fund is also looking at putting together a team of investors to take a substantial stake in Genting's power division. But since Malaysian generation assets cannot be substantially owned by foreigners the local players are favoured to get the assets, the report said.

TA Research said in a note the power division contributes about 16 percent to Genting's operating profit.

"We would take this rumour with a pinch of salt. Power business is typically defensive with assured cash flow backed by PPAs, which suits nicely into Genting's business model," TA's James Ratnam said.

"We are leaving our earnings forecasts and target price unchanged pending confirmation from the company, if it is true at all. We continue to rate Genting as a buy given its good liquidity and as a proxy to defensive and commodity play,which are our main investment theme for 2008."

The Edge said Genting is exiting the power business to focus on its business in Singapore, where it is building a casino for up to S$6 billion ($4.4 billion), some S$800 million above its initial budget due to higher construction costs.

The jewel in Genting's power assets is the 720 megawatt Genting Sanyen Power Sdn Bhd, which has eight years of its concession to run. Its Chinese power plants have a total generating capacity of 1,671 MW. In India its assets have a generating capacity of 481 MW.

Genting shares, which were flat at 5.8 ringgit on Wednesday, have fallen 27 percent this year. (Reporting by Ramthan Hussain and Jalil Hamid; Editing by Lincoln Feast)