Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: KENANGA
Company Name: TENAGA NASIONAL BHD
Research House: KENANGA
Shares of Tenaga Nasional Bhd (TNB) jumped higher today after it officially received approval from the government to increased electricity tariffs, effective June 1.
At 10.20am, Tenaga increased 54 sen to RM7.06, after opening 50 sen higher at RM7.02.
The government had announced yesterday that average electricity tariffs will be raised by 2.23 sen per kilowatt hour (kWh) or 7.12 per cent to 33.54 sen kWh, from 31.31 sen kWh, effective Wednesday.
In a research note today, AmResearch Sdn Bhd maintain their "hold" call on Tenaga with a slightly higher fair value of RM6.60 per share due to the tariff adjustment.
"Given that Tenaga's financial year 2011 coal cost is likely to average US$110 per tonne and was not addressed in this current tariff adjustment, we view Tenaga's tariff visibility as still largely opaque at this juncture.
"We are only mildly positive about the tariff increase as the net tariff increase of two per cent has already been mostly accounted for in our financial year 2012 and 2013 forecast assumptions," it 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
At 10.20am, Tenaga increased 54 sen to RM7.06, after opening 50 sen higher at RM7.02.
The government had announced yesterday that average electricity tariffs will be raised by 2.23 sen per kilowatt hour (kWh) or 7.12 per cent to 33.54 sen kWh, from 31.31 sen kWh, effective Wednesday.
In a research note today, AmResearch Sdn Bhd maintain their "hold" call on Tenaga with a slightly higher fair value of RM6.60 per share due to the tariff adjustment.
"Given that Tenaga's financial year 2011 coal cost is likely to average US$110 per tonne and was not addressed in this current tariff adjustment, we view Tenaga's tariff visibility as still largely opaque at this juncture.
"We are only mildly positive about the tariff increase as the net tariff increase of two per cent has already been mostly accounted for in our financial year 2012 and 2013 forecast assumptions," it 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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