Tuesday, April 6, 2010

'Trading buy' call on Tenaga maintained

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".

"We expect Tenaga’s 2QFY10 results, which will be announced on 29 April 2010, to be stronger than expected due to a sharp rebound in electricity demand growth while coal costs remain under control."

"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.

Click "refresh" for manual update message


Commodity Futures Charts