Kenanga has maintained a "trading buy" recommendation on Tenaga Bhd, given limited downside as demand is strengthening whilst coal cost appears to be within the coal compensated price.
"However, a formal fuel-pass-through (FPT) tariff formula is still required to strengthen fundamentals and re-rate TNB convincingly," the research house said.
Foreign shareholding is still very low at 8.6 per cent at 28/2/10, Kenanga noted.
Meanwhile, AmBank reiterated "our BUY call on Tenaga Nasional Bhd (Tenaga) with a higher fair value of RM10.00 a share".
"All-in, given strong demand recovery, there is likelihood that street estimates will be raised over the next two quarters," AmBank said.
"We have raised Tenaga’s demand growth to 5 per cent from 4 per cent in FY10F and 6 per cent from 5 per cent in FY11F."
This raised FY10F-FY12F net profit by 5 per cent-8 per cent and our DCF from RM9.90 a share to RM11.10.
" Applying a 10 per cent discount for tariff review uncertainty, our fair value translates to RM10.00 a share," said AmBank.