OSK analyst reall KANASAI.
TNB’s core net profit was below our forecasts as a gas curtailment exercise saw it generating 3 times more power from coal IPPs on a q-o-q basis. Higher taxes and provisions also led to a q-o-q decline although core PBT still went up y-o-y on lower fuel costs. Although we expect 4Q to be better, we are still revising downwards our FY09 net profit by 5% although its longer term forecasts are intact. Our DCF based fair value is thus unchanged at RM9.00. Nonetheless, with the Government having decided against a tariff hike for now, the limited upside to our fair value and generally disappointing results, we downgrade TNB to a Neutral.