Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
HLIB Research has downgraded its call on Tenaga Nasional Bhd to a "hold" with a target price of RM5.10 based on a discounted cashflow to equity (DCFE).
As at 3.07pm, Tenaga was up 3 sen at RM5.04 on Bursa Malaysia.
In terms of capitalisation, Tenaga was in 11th position with a market value of RM27.6 billion.
HLIB's positive views included the implementation of fuel cost pass through mechanism and fuel cost sharing.
It added that the proposal for fuel cost sharing between Tenaga (40 per cent), Petronas (30 per cent) and independent power producers (30 per cent) was pending government approval.
The research house also said its earnings forecast for Tenaga in the current financial year has been reduced by 48.4 per cent, after factoring the utility firm's losses of RM266 million incurred in the fourth quarter ended August 31, 2011, due to gas supply constraints.
HLIB has also lowered Tenaga's earnings for financial years 2012 and 2013 by 27.2 per cent and 6.2 per cent, respectively.
It said average gas supply for Tenaga's fourth quarter of its financial year 2011 was still below 1,000 mmscfd level, lower than its previous guidance of 1,050 mmscfd.
"Coal power plants utilisation rate had already been maximised while hydro power generation was seasonally lower in the fourth quarter.
"Hence, Tenaga had to continue relying on distillate and oil to make up the shortfall.
"Additional gas allocation of 200 mmscfd will only start by July 2012 when the Melaka regasification plant commences operation. Even then, the additional gas supply will only suffice for financial year 2013," HLIB added.
For the financial years 2014 to 2016, HLIB said Tenaga may again face potential higher fuel cost when gas power plants' utilisation was expected to hit maximum capacity.
Its new coal power plant in Janamanjung, Lumut, will only commence earliest by March 2015.
HLIB also said gas prices in Malaysia were expected to increase to match international levels by end-2015 while coal, oil and distillate prices were expected to maintain at high levels, going forward. -- Bernama
Company Name: TENAGA NASIONAL BHD
| Research House: HLG | Price Call: HOLD | Target Price: 5.10 |
HLIB Research has downgraded its call on Tenaga Nasional Bhd to a "hold" with a target price of RM5.10 based on a discounted cashflow to equity (DCFE).
As at 3.07pm, Tenaga was up 3 sen at RM5.04 on Bursa Malaysia.
In terms of capitalisation, Tenaga was in 11th position with a market value of RM27.6 billion.
HLIB's positive views included the implementation of fuel cost pass through mechanism and fuel cost sharing.
It added that the proposal for fuel cost sharing between Tenaga (40 per cent), Petronas (30 per cent) and independent power producers (30 per cent) was pending government approval.
The research house also said its earnings forecast for Tenaga in the current financial year has been reduced by 48.4 per cent, after factoring the utility firm's losses of RM266 million incurred in the fourth quarter ended August 31, 2011, due to gas supply constraints.
HLIB has also lowered Tenaga's earnings for financial years 2012 and 2013 by 27.2 per cent and 6.2 per cent, respectively.
It said average gas supply for Tenaga's fourth quarter of its financial year 2011 was still below 1,000 mmscfd level, lower than its previous guidance of 1,050 mmscfd.
"Coal power plants utilisation rate had already been maximised while hydro power generation was seasonally lower in the fourth quarter.
"Hence, Tenaga had to continue relying on distillate and oil to make up the shortfall.
"Additional gas allocation of 200 mmscfd will only start by July 2012 when the Melaka regasification plant commences operation. Even then, the additional gas supply will only suffice for financial year 2013," HLIB added.
For the financial years 2014 to 2016, HLIB said Tenaga may again face potential higher fuel cost when gas power plants' utilisation was expected to hit maximum capacity.
Its new coal power plant in Janamanjung, Lumut, will only commence earliest by March 2015.
HLIB also said gas prices in Malaysia were expected to increase to match international levels by end-2015 while coal, oil and distillate prices were expected to maintain at high levels, going forward. -- Bernama
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