Hot Stock Tenaga up after 1Q profit beats forecast

by **Cals** Sat 30 Jan 2016, 02:24

Hot Stock

[size=28]Tenaga up after 1Q profit beats forecast

By Chong Jin Hun / theedgemarkets.com | January 29, 2016 : 10:34 AM MYT

KUALA LUMPUR (Jan 29): Tenaga Nasional Bhd ([You must be registered and logged in to see this image.] Valuation: 1.20, Fundamental: 1.30) rose as much as 24 sen or 2% after analysts said the state-controlled utility's first quarter financials were above forecast. This was despite Tenaga reporting lower net profit and revenue from a year earlier.

Yesterday, Tenaga said net profit fell to RM1.98 billion in the first quarter ended Nov 30, 2015 (1QFY16) from RM2.35 billion. Revenue was lower at RM10.68 billion versus RM11.03 billion.

Today, Tenaga shares rose to RM13.44 at 9:54am with some two million shares done. The stock had earlier fallen to RM12.98, its lowest so far today.

In a note today, CIMB ([You must be registered and logged in to see this image.] Valuation: 1.65, Fundamental: 0.55) Investment Bank Bhd analyst Saw Xiao Jun said Tenaga's 1QFY16 core net profit was 14% and 23% higher than CIMB's and consensus forecast respectively.

Saw said Tenaga's core net profit had excluded foreign exchange losses.

"Despite the weaker earnings outlook, Tenaga is still on track to achieve stronger earnings in FY16. We expect its FY16 core net profit to grow 11%, driven by contribution from its new power plants that will come on stream in the next few months," he said.

Saw said CIMB raised its target price (TP) for Tenaga shares to RM16.60 from RM15.70. The TP upgrade came with an unchanged "add" call for the stock.

Saw said CIMB upped its Tenaga share TP after raising its earnings per share forecast for the company by 5% to 6% for FY16 to FY18.

Meanwhile, TA Securities Holdings Bhd wrote in a note today that the firm had cut its TP for Tenaga shares to RM16.36 from RM17.07. The lower TP came with an unchanged "buy" call for the stock.

"We change our valuation methodology for Tenaga from P/E (price-earnings) to DCF (discounted cash flow)," TA said.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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