Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: AMMB
Company Name: TENAGA NASIONAL BHD
Research House: AMMB
With the electricity tariffs increase having a minimal impact on Tenaga Nasional Bhd, AmResearch Sdn Bhd says it is recommending a "hold" call on the utility stock on Bursa Malaysia.
"We maintain our hold call on Tenaga with a slightly higher derived fair value of RM6.60/share (versus RM6.22/share earlier) due to the power tariffs adjustment which takes effect on June 1, 2011.
"We are only mildly positive about the tariff increase, as the net tariff increase of 2.0 per cent (excluding gas-pass through adjustment) has already been mostly accounted for in our FY12-FY13 forecast assumptions.
"As such, we have raised the FY12-FY13 forecast by only 2.0 per cent. But we have lowered Tenaga’s FY11 forecast earnings by 1.0 per cent due to a one-month mismatch between the effective date of the gas cost increase and electricity billing, which will only account for the higher revenue in July this year," the research house said.
Meanwhile, HwangDBS Vickers Research maintained its "buy" call on Tenaga and raised its target price to RM8.80, from RM7.50, previously.
"A seven per cent average hike is more than sufficient to offset the 28 per cent increase in gas price," it said.
Kenanga Research, which upgraded Tenaga to "outperform" with a higher target price of RM8.06, from RM6.09, previously, is positive of the tariff adjustments that act as a structural change to Tenaga given the introduction of the Fuel Cost Pass-Through mechanism, which finally addresses fuel risks.. -- Bernama
"We maintain our hold call on Tenaga with a slightly higher derived fair value of RM6.60/share (versus RM6.22/share earlier) due to the power tariffs adjustment which takes effect on June 1, 2011.
"We are only mildly positive about the tariff increase, as the net tariff increase of 2.0 per cent (excluding gas-pass through adjustment) has already been mostly accounted for in our FY12-FY13 forecast assumptions.
"As such, we have raised the FY12-FY13 forecast by only 2.0 per cent. But we have lowered Tenaga’s FY11 forecast earnings by 1.0 per cent due to a one-month mismatch between the effective date of the gas cost increase and electricity billing, which will only account for the higher revenue in July this year," the research house said.
Meanwhile, HwangDBS Vickers Research maintained its "buy" call on Tenaga and raised its target price to RM8.80, from RM7.50, previously.
"A seven per cent average hike is more than sufficient to offset the 28 per cent increase in gas price," it said.
Kenanga Research, which upgraded Tenaga to "outperform" with a higher target price of RM8.06, from RM6.09, previously, is positive of the tariff adjustments that act as a structural change to Tenaga given the introduction of the Fuel Cost Pass-Through mechanism, which finally addresses fuel risks.. -- Bernama
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