Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: OSK
Company Name: TENAGA NASIONAL BHD
Research House: OSK
OSK Research says Tenaga Nasional Bhd's (TNB) annualised core net profit for the first half 2011 of RM1260.7 million was above its expectations and consensus, as the market had expected fuel costs to go up, given the ever-rising price of coal.
These higher costs are gradually being reflected in TNB’s bottom line, as the second quarter profit after tax plunged 46.1 per cent quarter-on-quarter while for the first half 2011, it fell 21.1 per cent, said OSK Research in its research note today.
It also said TNB had to generate more power from coal than gas
for the first time, given the incidences of gas curtailment, while coal prices rose to an average US$103.8 per tonne in the second quarter.
Nonetheless, it added, the company remains profitable and announced a 4.5 sen interim dividend for the quarter.
"Although by cutting demand forecasts and expecting more coal generation, our financial year 2011 and 2012 core net profit forecasts are cut by 3.4 per cent and 3.5 per cent respectively, with our fair value cut to RM7.03 from RM7.54," the research house said.
OSK Research said it maintained a "buy" call for TNB as it believes the market has sufficiently priced in the negative news related to coal prices, gas curtailment and tariff delay.
"While our "buy" call on TNB has been unproductive with the counter falling some 7.4 per cent and under performing the KLCI by about 21.5 per cent over the past 12 months, we believe the share price has reached a fairly well supported region," it added. -- Bernama
These higher costs are gradually being reflected in TNB’s bottom line, as the second quarter profit after tax plunged 46.1 per cent quarter-on-quarter while for the first half 2011, it fell 21.1 per cent, said OSK Research in its research note today.
It also said TNB had to generate more power from coal than gas
for the first time, given the incidences of gas curtailment, while coal prices rose to an average US$103.8 per tonne in the second quarter.
Nonetheless, it added, the company remains profitable and announced a 4.5 sen interim dividend for the quarter.
"Although by cutting demand forecasts and expecting more coal generation, our financial year 2011 and 2012 core net profit forecasts are cut by 3.4 per cent and 3.5 per cent respectively, with our fair value cut to RM7.03 from RM7.54," the research house said.
OSK Research said it maintained a "buy" call for TNB as it believes the market has sufficiently priced in the negative news related to coal prices, gas curtailment and tariff delay.
"While our "buy" call on TNB has been unproductive with the counter falling some 7.4 per cent and under performing the KLCI by about 21.5 per cent over the past 12 months, we believe the share price has reached a fairly well supported region," it added. -- Bernama
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