TNB (HOLD) - 2Q12 to Show Profits

Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD

Research House: HLG

Price Call: HOLD

Target Price: 6.54

TNB (HOLD)

2Q12 to Show Profits

• Improved natural gas supply to the sector, stable coal power generationas well as seasonally lower power demand in 2Q12, had reduced reliance onalternative fuels and lowered overall fuel cost to TNB.
• TNB had received total RM2bn fuel compensation from Government andPetronas in Feb 2012, and will be recognised as an EI item. Note that theamount is taxable at 25%.
• Additionally TNB will recognise another RM660m forex translation gaindue to appreciation of MYR against US$ and JP''.
• Expect TNB to report 2Q12 net profits of RM2.7bn and core profits ofRM550m.
• However, we believe TNB will revert back to alternative fuels as powerdemand is expected to peak in Apr-Aug period, while being hit by seasonallylower hydropower generation.
• Maintain Hold on TNB with Target Price of RM6.54.

Source: HLIB Research - 6 April 2012