Press release -
Tenaga Nasional Powers Ahead as ASEAN’s Most Valuable and 3rd Strongest Utilities Brand in the World
Brand Finance announced the ranking of the “Top 50 Global Utility brands 2020” and the results are very encouraging given the current situation. Most of the top 10 global ranked brands have grown in value with #1 ranked China’s State Grid Corporation increasing their brand value by a whopping US$ 5.7 billion.
The global top 10 rankings had representation from 8 countries with State Grid Corporation of China once again taking the #1 spot with no close second to displace them. Majority of the brands increased both their brand values as well brand strengths.
Closer home in ASEAN, Tenaga was ranked the 3rd strongest utilities brand in the world behind Kepko (South Korea) and WEC Energy Group (USA). Tenaga was also the only utilities brand from ASEAN in the ranking and also the most valuable utilities brand in ASEAN.
Tenaga Nasional, valued at US$ 2.742 bn had a brand value increase of over 10% and managed several other achievements, leading them to the forefront of the utilities sector brand rankings globally. These being:
- Top 3 strongest utility brands globally
- 2nd strongest utility brand in ASIA (after KEPCO of South Korea)
- Only ASEAN Utility brand on the ranking
- One of the only 8 AAA rated utilities brands worldwide
- Top 15 highest brand value growth (%age) brands worldwide
- 3rd Highest ranking improvement in ASIA
- Top 20 ranking improvement worldwide amongst the top 50
The Top 50 Global Utility Brand Rankings 2020, the world’s only ISO process compliant brand values and brand rankings were released by Brand Finance.
Though not amongst the top 5 globally, the US brands dominated the list with 20 US brands featuring in the top 50 rankings with 2 in the top 10 most valuable brands, and 5 in the top 10 strongest brands globally.
Utilities brands are likely to see limited impact as a result of COVID-19 pandemic in the future.
“The strength and value of the brand is the true reflection of the management focus and ROI on brand investments. Tenaga Nasional has done extremely well in establishing a strong and competitive brand. The key challenge will be to retain and grow the Brand Strength and the Brand Value going forward” said Samir Dixit, Managing Director of Brand Finance Asia Pacific.
Samir highlighted that “The strength of a utility brands is influenced by how they manage the customer experience, people focus aspects, and strategic investment in digitalization and modernization. TNB has continued to focus on both the business and the people aspects during the COVID 19 with uninterrupted service and strong community support via donations to states and hospitals”.
Samir further added that “While the utilities sector may not be as negatively impacted by COVID-19 pandemic, their challenges will remain a plenty with a global shift in demand towards clean energy. Only brands that will embrace and lead the clean energy challenge will be the winner in the long term”.
State Grid powers ahead
China’s State Grid has retained the title of the world’s most valuable utilities brand for the third consecutive year, according to the Brand Finance Utilities 50 2020 report, after recording a 11% brand value increase to US$57.0 billion. Supplying power to over 1.1 billion people and covering 88% of Chinese national territory, State Grid is the largest utilities brand in the world. Its sheer size and dominance are reflected by the significant gap ahead of EDF (down 2% to US$11.9 billion) in second and Enel (up 14% to US$11.8 billion) in third.
The brand is increasing its focus on CSR initiatives, through funding charities and committing to poverty alleviation. State Grid has also supported China’s push to become a greener, more environmentally friendly nation, with a clear target to be the advocate and leader of Ubiquitous Electric Internet of Things.
The five further Chinese utilities brands in the ranking are performing similarly as solidly, with ENN (up 40% to US$2.1 billion) and Datang Power (up 36% to US$1.9 billion) as the third and fifth fastest growing brands in the ranking respectively.
US brands dominate
The US dominates with 20 brands claiming a position in the Brand Finance Utilities 50 2020 ranking, including three new entrants: Republic Services in 46th (brand value US$1.3 billion); Calpine in 48th (brand value US$1.3 billion); and AES Corporation in 49th (brand value US$1.1 billion). American utilities brands often operate on a regional level in contrast to their European counterparts, which have a more consolidated model. This is reflected by only 14 European brands featuring in the ranking.
Volatility in European market
While the impact from Covid-19 on European utilities may be limited, it will be vital for these brands to continue to reliably provide supply security. While the market has seen significant M&A activity in the last few years, this is likely to see a slowdown given the economic uncertainty in the global economy.
Several brands are also concurrently seeing changes to their top management with CEOs stepping down, including Engie’s (up 7% to US$11.1 billion), Fortum’s and Centrica’s - adding to the uncertain operating environment.
All three German brands in the ranking are the fastest falling this year: EnBW (down 19% to US$1.4 billion); Innogy (down 17% to US$4.5 billion); and E.ON (down 11% to US$3.0 billion).
All three brands’ forecast revenues are lower than in previous years, thus damaging their brand values. As with other utilities brands throughout the EU, EnBW, Innogy and E.ONare negotiating the EU’s decarbonisation efforts, which have led to brands abandoning or reducing their nuclear and coal arms for clean energy sources – potentially causing a drop in forecast revenue. EnBW doubled its offshore wind capacity in Europe in 2019, however, and has set its sights on expanding its wind operations on both coasts of the US, a key market for the sector.
KEPCO is world’s strongest utilities brand
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, customer familiarity, staff satisfaction, and corporate reputation. Alongside revenue forecasts, brand strength is a crucial driver of brand value. According to these criteria, KEPCO (up 11% to US$7.5 billion) is the world’s strongest utilities brand with a Brand Strength Index (BSI) score of 87.4 out of 100 and a corresponding AAA brand strength rating.
KEPCO prides itself on being one of the world’s leading brands in spearheading the shift and expansion towards the use of safe and clean energy, in its bid to reduce carbon emissions and tackle the global climate change issue. The South Korean brand has strived towards its CSR initiatives as part of its wider goal to become a sustainable global utility brand and has been recognised internationally for its efforts.
View the full Brand Finance Utilities 50 2020 report here
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Topics
- Consulting
Categories
- brand
- brand finance
- brand finance asia pacific
- brand finance singapore
- brand rankings
- brand strategy
- brand valuation
- brand valuation in singapore
- brand value
- samir dixit
- brand valuation in malaysia
- utilities
- utilities brand
- energy
- energy brand
- most valuable utilities brand
- strongest utilities brand
- global brand study
- top 100 utilities brand
- brand strength
About Brand Finance
Brand Finance plc, the world's leading brand valuation consultancy, advises strongly branded organisations on maximising their brand value through effective management of their brands and intangible assets. Founded in 1996, Brand Finance has performed thousands of branded business, brand and intangible asset valuations worth trillions of dollars.
Its clients include international brand owners, tax authorities, Intellectual Property lawyers and investment banks. Its work is frequently peer-reviewed by the big four audit practices and its reports have been accepted by various regulatory bodies, including the UK Takeover Panel.
Brand Finance is headquartered in London and has a network of international offices in Amsterdam, Bangalore, Barcelona, Cape Town, Colombo, Dubai, Geneva, Helsinki, Hong Kong, Istanbul, Lisbon, Madrid, Moscow, New York, Paris, Sao Paulo, Sydney, Singapore, Toronto and Zagreb.
Methodology
Brand Finance has assessed the impact of the COVID-19 outbreak based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. Based on this impact on enterprise value, Brand Finance estimated the likely impact on brand value for each sector. The industries have been classified into three categories – limited impact (0% brand value loss), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the severity of enterprise value loss observed for the sector in the period between January and March 2020
Definition of Brand
Brand Finance helped to craft the internationally recognised standard on Brand Valuation – ISO 10668. It defines a brand as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand Strength
Brand strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Valuation Approach
Brand Finance calculates the values of the brands in its league tables using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
- Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
- Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
- Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
- Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
- Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
- Apply the royalty rate to the forecast revenues to derive brand revenues.
- Brand revenues are discounted post-tax to a net present value which equals the brand value.
