Company Name: TENAGA NASIONAL BHD
|Research House: PUBLIC BANK||Price Call: BUY||Target Price: 8.85|
Public Investment Bank raised the target price of Tenaga Nasional Bhd to RM8.85 per share from RM7.76 after the second quarter earnings of the country's largest electricity utility beat market expectations.
"We continue to like Tenaga for its defensive nature and its position as the biggest winner of structural reforms in the local power sector," the research house said in a note on Friday.
"Besides earnings growth from its capacity expansion, the group is also poised to benefit from the fuel cost pass-through mechanism which would see its earnings being based on rewards for efficiency instead of subject to forces beyond its control," it added.
Maintaining 'outperform' on the counter, Public Investment said it believes the fuel cost pass-through mechanism could be implemented once the general elections are over.
Tenaga posted on Thursday a higher-than-expected net profit of RM1.27 billion for the second quarter ended in February, driven by forex gains and lower coal costs.
Shares of Tenanga rose 0.13 per cent to RM7.96, while the benchmark stock index climbed 0.07 per cent.-- Reuters