Tenaga falls ahead of weaker 3Q results

by **hlk** Mon 18 Jul 2011, 16:16

KUALA LUMPUR: Shares of TENAGA NASIONAL BHD [] fell in late afternoon on Monday, July 18, on expectations of weak third quarter results when it announces the results on Thursday.

At 3.35pm, Tenaga was down 17 sen to RM6.57 with 1.57 million shares done. The decline was also partly due to the weaker broader market.

The FBM KLCI fell 13.58 points to 1,563.67. Turnover was 502.21 million shares valued at RM800.58 million. Losers battered gainers nearly five to one, with 603 decliners to 126 advancers.

CIMB Equities said in a report that Tenaga's 3QFY8/11 results were likely to miss its expectations but meet consensus forecasts.

“We estimate RM1.86 billion to RM1.90 billion net profit for 9MFY11 or 68-70% of our FY11 forecast and 74-76% of consensus. The numbers imply a 10%-17% on-quarter decline in 3Q net profit due to lower gas availability, high fuel prices and weaker demand.

“Post results, we are likely to cut our FY11-13 EPS by 1-7%, with the steepest downgrade expected for FY11 as the tariff hikes will only kick in during 4QFY11,” it said.

However, CIMB Research said it expected to maintain its TRADING BUY recommendation as more tariff increases and a complete pass-through for coal cost could catalyse the stock.

“The stock is not an outright Outperform as execution risks cloud its longer-term prospects. Our target price is unchanged at RM8.05, based on 1.4 times price-to-book value or 30% below Tenaga's historical average,” it said.