Hot Stock Tenaga jumps in tandem with 3Q earnings

by **Cals** Fri 19 Jul 2013, 12:49

Hot Stock Tenaga jumps in tandem with 3Q earnings
Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Friday, 19 July 2013 11:19

KUALA LUMPUR (July 19): Tenaga Nasional Bhd (TNB) shares were pushed by as much as 40 sen or 4.44% today after the state-owned utility group announced its third quarter earnings that were over 50% higher than analysts’ expectations.

At 11:06 am, TNB’s stock was trading 32 sen or 3.55% higher at RM9.33. A total of 12.47 million shares were transacted.

The group’s call warrant TENAGA-C1, however, skyrocketed by 15 sen or 66.67% to 37.5 sen. It had a trading volume of 10,000.

Both securities sat on the mid-morning’s top gainers ranking.

Yesterday, the utility group blew away analysts' and investors' expectations as it announced that its net profit for the three months ended May 30, 2013 (3QFY13) came to RM1.71 billion on revenue of RM9.65 billion.

The net profit was 155% higher than the previous year’s RM672.4 million, which was mainly attributed to foreign exchange gains, higher power sales and lower fuel costs. Revenue in the quarter stood at RM9.19 billion.

While analysts covering TNB had expected a jump in earnings, a note by Credit Suisse said the average street forecast was only RM1.1 billion.

TNB, one of the FTSE Bursa Malaysia KLCI constituents, has risen by 8.69% this month against the key stock barometer’s 1.01% growth in the same period. While the stock has appreciated, 22 out of 25 analysts polled by Bloomberg still recommend TNB as a “buy”.

“Nevertheless, the stock still trades at an attractive price-to-book value of 1.4 times at the lower range of an adjusted 1.1 times to 2.7 times over the past five years. Tenaga also offers an attractive FY14F price-earnings ratio of 11 times, compared with the stock’s three-year average band of 10 times to 16 times,” said AmResearch’s Alex Goh in a note today.

The note also said the research house raised its target price to RM10.45 from RM9.15. A “buy” rating was kept.