Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: AMMB
Tenaga Nasional Bhd
(April 11, RM6.05)
Maintain hold at RM6.11 with fair value RM7.20: We reiterate our 'hold' call on Tenaga Nasional Bhd with an unchanged discounted cash flow-derived fair value of RM7.20.
Tenaga's 22%-owned Integrax appears to be resolving the management conflict between the two brothers that had resulted in lawsuits. This is expected following Tenaga's recent acquisition of Harun Halim Rasip's 22% stake in Integrax for RM106 million cash to resolve the Rasip brothers' conflict, which was affecting the decisions and operations of its 80%-owned Lekir Bulk Terminal (LBK). LBK is presently dedicated to coal-handling services for Tenaga's Janamanjung power plant, which is being expanded from 2,100MW currently to 3,100MW.
Harun has been redesignated sole CEO of Integrax from joint-CEO, while his younger brother Amin has been redesignated from joint-CEO to non-independent non-executive director. Tenaga chief financial officer Mohamed Rafique Merican Mohd Wahiduddin Merican was also appointed a non-independent non-executive director of Integrax.
We understand that Tenaga's management has yet to decide on whether to resume Integrax's proposed iron-ore transhipment agreement ' which lapsed last year ' with Brazil's Vale SA, one of the world's largest producers of iron ore and pellets, raw materials for the steel industry, and one of the largest producers of nickel.
The aborted transhipment agreement involved the building of a RM300 million deepwater bulk terminal on Pulau Lekir Satu, Teluk Rubiah, which could accommodate cargo vessels of up to 400,000 deadweight tonnes and handle up to 30 million tonnes of iron ore.
But Harun, who was opposed to the 10-year transhipment agreement, appears to have the support of Tenaga. He believed the investment returns from the expansion of LBT would be too low.
We remain neutral about Tenaga's investment in Integrax and maintain FY11F to FY13F earnings. The stock currently trades at a fair CY11F price earnings ratio of 12 times, within Tenaga's four-year average forward PER band of 11 to 16 times. ' AmResearch, April 11
This article appeared in The Edge Financial Daily, April 12, 2011.
Company Name: TENAGA NASIONAL BHD
Research House: AMMB
Tenaga Nasional Bhd
(April 11, RM6.05)
Maintain hold at RM6.11 with fair value RM7.20: We reiterate our 'hold' call on Tenaga Nasional Bhd with an unchanged discounted cash flow-derived fair value of RM7.20.
Tenaga's 22%-owned Integrax appears to be resolving the management conflict between the two brothers that had resulted in lawsuits. This is expected following Tenaga's recent acquisition of Harun Halim Rasip's 22% stake in Integrax for RM106 million cash to resolve the Rasip brothers' conflict, which was affecting the decisions and operations of its 80%-owned Lekir Bulk Terminal (LBK). LBK is presently dedicated to coal-handling services for Tenaga's Janamanjung power plant, which is being expanded from 2,100MW currently to 3,100MW.
Harun has been redesignated sole CEO of Integrax from joint-CEO, while his younger brother Amin has been redesignated from joint-CEO to non-independent non-executive director. Tenaga chief financial officer Mohamed Rafique Merican Mohd Wahiduddin Merican was also appointed a non-independent non-executive director of Integrax.
We understand that Tenaga's management has yet to decide on whether to resume Integrax's proposed iron-ore transhipment agreement ' which lapsed last year ' with Brazil's Vale SA, one of the world's largest producers of iron ore and pellets, raw materials for the steel industry, and one of the largest producers of nickel.
The aborted transhipment agreement involved the building of a RM300 million deepwater bulk terminal on Pulau Lekir Satu, Teluk Rubiah, which could accommodate cargo vessels of up to 400,000 deadweight tonnes and handle up to 30 million tonnes of iron ore.
But Harun, who was opposed to the 10-year transhipment agreement, appears to have the support of Tenaga. He believed the investment returns from the expansion of LBT would be too low.
We remain neutral about Tenaga's investment in Integrax and maintain FY11F to FY13F earnings. The stock currently trades at a fair CY11F price earnings ratio of 12 times, within Tenaga's four-year average forward PER band of 11 to 16 times. ' AmResearch, April 11
This article appeared in The Edge Financial Daily, April 12, 2011.
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