Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: CIMB
KUALA LUMPUR: CIMB Equities Research is maintaining its Neutral stance on Tenaga Nasional and its end-CY10 target price stays at RM9.15 based on an unchanged forward price-to-book value of 1.4 times. It said on Wednesday, April 14 Tenaga's 2QFY8/10 results, scheduled for release on April 20, are likely to beat expectations. "But beyond the potential results outperformance, we see limited re-rating catalysts. Although there is some market speculation of a mid-year tariff hike, we do not see an urgent need to raise tariffs then," it said. The more pressing issue is Tenaga's vulnerability to rising fuel costs which could return to the limelight in FY11 in the absence of a transparent formula. CIMB Research said other concerns include uncertainty about its i) role in the Bakun and undersea cable project, and ii) succession plan as its CEO's contract will lapse soon. "Although we retain our FY10-12 earnings forecasts pending the results release, we flag that we may raise FY10 demand growth from 4.8% to 6-7%, which could raise our core earnings by 3-4%," it said.
Company Name: TENAGA NASIONAL BHD
Research House: CIMB
KUALA LUMPUR: CIMB Equities Research is maintaining its Neutral stance on Tenaga Nasional and its end-CY10 target price stays at RM9.15 based on an unchanged forward price-to-book value of 1.4 times. It said on Wednesday, April 14 Tenaga's 2QFY8/10 results, scheduled for release on April 20, are likely to beat expectations. "But beyond the potential results outperformance, we see limited re-rating catalysts. Although there is some market speculation of a mid-year tariff hike, we do not see an urgent need to raise tariffs then," it said. The more pressing issue is Tenaga's vulnerability to rising fuel costs which could return to the limelight in FY11 in the absence of a transparent formula. CIMB Research said other concerns include uncertainty about its i) role in the Bakun and undersea cable project, and ii) succession plan as its CEO's contract will lapse soon. "Although we retain our FY10-12 earnings forecasts pending the results release, we flag that we may raise FY10 demand growth from 4.8% to 6-7%, which could raise our core earnings by 3-4%," it said.
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