KUALA LUMPUR: Maybank Investment Research is maintaining its Buy call on Tenaga Nasional at RM8.81 with an unchanged target price of RM12.10.
It said on Thursday, Jan 21 that while the power giant reported a strong 1Q results for the period ended Nov 30, what matters was the tariff formula.
It said net profit ex-forex soared 49% YoY to RM742m. Power demand growth rebounded strongly from the 4.6% YoY Oct contraction. Margins expanded on lower fuel costs and general expenses. However, an additional RM565 million in capacity payments to IPP Jimah will be due this year and coal prices have spiked up.
“A base tariff review and tariff formula is crucial to Tenaga. We anticipate this by March,” it said.
Maybank Research said the 1Q net profit of RM742 million net profit ex-forex was 27% of its and consensus FY10 forecast.
However, it said there will be higher capacity payments to IPP Jimah as the year progresses. Also, Tenaga’s costs tend to be backloaded into its 4Q.
“We maintain our forecasts, which include a 2% net tariff hike effective March to offset the capacity payments,” it said.
KUALA LUMPUR: OSK Investment Research said Tenaga Nasional’s annualised 1QFY10 core net profit came in at RM2.83 billion, which was within both consensus and its forecast although it was at the upper range of consensus.
However, disappointment over the possible delay in its tariff adjustment may trigger some selling pressure.
In a research note issued on Thursday, Jan 21 it said nonetheless, with coal prices looking manageable and demand recovering, it maintained its forecasts for now as it had not built in any tariff hike.
“We see any selling pressure presenting a buying opportunity given that demand recovery will boost core profits by 36% y-o-y. The subsequent quarters should also improve on recovering demand. The fair value is maintained at RM9.38,” it said.