Hot Stock TNB actively traded ahead of 2Q results

by **Cals** Thu 18 Apr 2013, 15:54

Hot Stock TNB actively traded ahead of 2Q results
Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Thursday, 18 April 2013 15:41

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KUALA LUMPUR (April 18): TENAGA NASIONAL BHD []’s (TNB) shares has emerged to be one of the top actives ahead of the release of its second quarter results later today, after rising 30 sen in active trades yesterday.

Analysts expect the utility giant to rake in a bigger profit due to lower coal prices this year.

At 3.23 pm, TNB’s counter was trading one sen lower at RM7.98 with about 9.25 million shares changed hands. Earlier, the shares were trading between RM7.93 and RM8.03. It was ranked ninth on Bursa Malaysia’s top active counters.

RHB Research analyst Kong Heng Siong told theedgemalaysia.com that investors are chasing for TNB’s shares as many quarters are expecting the group’s results for its second quarter ended February 28, 2013 (2QFY13), to “beat street consensus’ (estimates)”.

“The financial results (for 2QFY13) are set to be released tonight. Due to the weak commodity prices so far, TNB’s net profit could rise due to cost savings,” Kong said over the telephone.

“As TNB is currently already in its financial year’s third quarter, and coal prices remain to be low, this could be a good year for TNB.”

In his latest note on TNB, Kong said coal prices averaged at US$90 per tonne in 2QFY13, compared to average of US$85 in 1QFY13 and average of US$110 in 2QFY12.

“We believe the current price weakness would help to ease TNB’s operating costs and hence lead to improving profitability,” he said in the note.

“Currently, coal prices are hovering at around US$82 to US$87 per tonne vis-à-vis our forecasts of US$95 per tonne for FY13 and US$100 per tonne for FY14 and FY15. If the current downtrend persists, there may be potential upgrades to our earnings forecasts.”

RHB has set a target price of RM8.41 for TNB, which is 9.51% higher than Tuesday’s close of RM7.68. The research house has also maintained its “buy” rating on the utility giant.

RHB’s Kong also expects electricity sales by TNB in 2QFY13 to be 2% to 3% higher year-on-year from 23,271 GWh, due to resilient domestic economic growth.

However, in comparison to the preceding quarter, he expects power consumption to remain flat or dip slightly, given that TNB’s second quarter is seasonally the weakest quarter.