MIDF reiterates 'buy' call on Tenaga (5347)

MIDF Research expects Tenaga Nasional Bhd's (TNB) earnings visibility to remain intact given the continued additional

fuel compensation despite the inconsistent gas supply.



For TNB's upcoming third quarter (Q3) financial year 2012 (FY2012)
results this Thursday, MIDF did not expect it to be a repeat of the
bumper numbers as in Q2 FY2012 due to the shortage of gas supply, which
necessitated TNB to burn more alternative fuels.



"This is also due to the weakening of the ringgit against the yen and US dollar," the research house said in a note today.



However, it said this would be offset by the fuel compensation realised in the Q3 FY2012 and lower coal prices.







"We are expecting its third quarter financial year 2012 net profit
to be in the region of between RM600 million and RM700 million, a
significant improvement over the RM500 million core net loss in same
quarter last year," it added.


MIDF said the earnings figure excluded the RM250 million fuel
compensation, which is a one-off item and forex translation loss of
more than RM430 million.



"Hence, TNB's core net profit for the nine months in FY2012 is
likely to soar to RM1.5 billion, which accounts to 54 per cent of our
full FY2012 forecast," it added.



The research firm left its earnings forecast unchanged pending the
release of Q3 FY2012 results. "We reiterate our 'buy' call on TNB with
target price remaining unchanged at RM7.50," it added. -- Bernama