AmResearch maintains Buy on Tenaga, ups fair value to RM15.13

by **Cals** Thu 06 Nov 2014, 18:47

AmResearch maintains Buy on Tenaga, ups fair value to RM15.13

KUALA LUMPUR (Nov 6): AmResearch has maintained its Buy rating on Tenaga Nasional Bhd (Tenaga) ([You must be registered and logged in to see this image.]Financial Dashboard) at RM13.46 with a higher fair value of RM15.13 (from RM15) previously, which it said implies an FY15F PE of 13x and a P/BV of 2.0x.
In a note Thursday, the reserach house said the Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili had said that the existing electricity tariffs will be maintained until June 2015.
Additionally, the price of piped gas supplied by Petronas to the power sector is also left unchanged at RM15.20/mmbtu, said the research house.
AmResearch said the government’s move was in line with its earlier proposal to use the savings as part of a fuel stabilisation fund.
It said the balance of power purchase agreement (PPA) savings was estimated to be RM170 million after deducting the ICPT costs needed to maintain the current tariffs.
The research house said despite the absence of an upward tariff revision, Tenaga’s earnings revision cycle remained intact, underpinned by the previous round of tariff hike.
“Following the government’s decision, Tenaga will gain a one-off boost of RM1148 million to its FY15F pretax profit.
“This translates to a 16% upwards earnings revision to our FY15F forecasts. Our estimates for FY16F-FY17F are maintained,” it said.
At 9.37am, Tenaga fell 1.93% or 26 sen to RM13.20 with 2.73 million shares done.