Hot Stock Tenaga slips 1.28% on flat 3Q earnings

by **Cals** Fri 18 Jul 2014, 01:06

Hot Stock Tenaga slips 1.28% on flat 3Q earnings

Business & Markets 2014

Written by Charlotte Chong of theedgemalaysia.com

Thursday, 17 July 2014 13:41

KUALA LUMPUR (July 17): Tenaga Nasional Bhd (TNB) slipped 1.28% to RM12.30 on flat 3Q earnings despite registering higher electricity sales.

Among the top losers across the local exchange, the utility group dropped 16 sen or 1.28% to RM 12.30 at 12:58pm with some 4.25 million shares traded, after falling to as low as RM12.26 earlier.

Following the announcement on TNB’s results yesterday, TA Securities and RHB Research have concurrently maintained their “buy” ratings on TNB.

RHB Research is maintaining its “buy” rating with its fair value revised up marginally to RM13.75 (from MYR13.24) as it rolled forward its valuation to FY15.

In a note today, RHB Research analyst Kong Heng Siong said that TNB’s 1HFY14 core earnings of RM2.2 billion was in line with both consensus and its estimates at 45.5% and 46.5% of the full-year forecasts respectively.

“Growth is largely driven by higher electricity demand as well as revised tariffs on Jan 1, 2014,” Kong added.

Echoing Kong, TA Securities analyst James Ratnam said in a report today that he had revised Tenaga's target price to RM14.37 (from RM13.96), in line with the earnings upgrade.

“Note that the higher TP partly reflects tax write back, but we think this is fair given that it is likely to be recurring, in line with Tenaga’s huge investment in new capacity.”

Tenaga announced yesterday that its net profit dropped a marginal 0.52% to RM1.72 billion for its 3Q ended May 31, despite achieving higher electricity sales of RM10.61 billion.

However, it has posted higher revenue of RM11.51 billion in the quarter under review, an increase of 19.31% from RM9.65 billion a year ago. Earnings per share narrowed slightly to 30.31 sen from 31.05 sen.

In a result note yesterday to Bursa Malaysia, Tenaga said it recorded electricity sales of RM10.61 billion in 3QFY14 against RM8.88 billion in the previous corresponding quarter.

“The increase was mainly from sales of electricity in the Peninsula and Sabah, which recorded an increase of 19.1% and 19.4% respectively, attributed from the increase in the average electricity tariff.”

As for its nine months ended May 31, Tenaga has raked in a net profit of RM5.12 billion, a 15.15% growth from RM4.44 billion a year ago. Revenue expanded 12.6% to RM31.1 billion from RM27.63 billion.

It explained that the higher profit was mainly due to the effect of extraordinary taxation credits amounting to RM1.26 billion arising from reduction in tax rate and utilisation of the reinvestment allowance for year assessment 2013 and the current year.

“The improvement was mainly from sales of electricity in Peninsular Malaysia and Sabah, which recorded an increase of 10.2% and 9.1% respectively,” Tenaga said.