CIMB Research maintains Hold on Tenaga
TENAGA (5347) TENAGA NASIONAL BHD
KUALA LUMPUR: CIMB Equities Research is maintaining its Hold recommendation for Tenaga Nasional Bhd as there is lack of clarity on the fuel cost pass-through (FCPT) mechanism.
It said on Monday Tenaga's core net profit for the financial year ended Aug 31, 2014 of RM4.7bil was in line with expectations, at 103% and 101% of its and consensus FY14 estimates, respectively.
“We expected Tenaga to post positive net profit growth in FY14, given that less LNG was burned in 4Q14 and there was gradual recovery in the IPP coal power plants.
“We lower FY15-16 EPS by 1.0%-1.1% after we updated our FY14 numbers and introduce our FY17 estimates. Our target price is raised to RM13.62, as we roll over to 12.8 times FY16 P/E (still at 20% discount to the market price-to-earnings (P/E),” it said.
CIMB Research said despite the positive set of FY14 results, it thinks that Tenaga's current valuation is expensive, considering the uncertain fuel cost outlook.
“While Tenaga’s FY15 earnings outlook is expected to remain stable due to the current low cost of coal, we believe that the risk of earnings uncertainty would only be addressed by the FCPT mechanism,” it said.
The research house said Tenaga's FY14 revenue increased 15.2% on-year on the back of the 2.5% increase in volume of electricity sold. Despite the slower volume growth in FY14 (FY13: 3.8% on-year), FY14 revenue was strong, thanks to the tariff hike that was implemented at the beginning of FY15.
The lower electricity volume growth was due to the decline in usage by the electronics (-3.0% on-year), iron and steel (-13.1% on-year) sectors.
The FY14 opex increased 13.9% on-year due to higher fuel costs.
“Overall generation costs increased by 17.5% on-year as a result of higher LNG usage. After stripping out the forex gains, one-off writebacks from Liberty Power Ltd and tax reinvestment allowances, Tenaga's FY14 core net profit was RM4.7bil,” it said.
http://www.thestar.com.my
TENAGA (5347) TENAGA NASIONAL BHD
KUALA LUMPUR: CIMB Equities Research is maintaining its Hold recommendation for Tenaga Nasional Bhd as there is lack of clarity on the fuel cost pass-through (FCPT) mechanism.
It said on Monday Tenaga's core net profit for the financial year ended Aug 31, 2014 of RM4.7bil was in line with expectations, at 103% and 101% of its and consensus FY14 estimates, respectively.
“We expected Tenaga to post positive net profit growth in FY14, given that less LNG was burned in 4Q14 and there was gradual recovery in the IPP coal power plants.
“We lower FY15-16 EPS by 1.0%-1.1% after we updated our FY14 numbers and introduce our FY17 estimates. Our target price is raised to RM13.62, as we roll over to 12.8 times FY16 P/E (still at 20% discount to the market price-to-earnings (P/E),” it said.
CIMB Research said despite the positive set of FY14 results, it thinks that Tenaga's current valuation is expensive, considering the uncertain fuel cost outlook.
“While Tenaga’s FY15 earnings outlook is expected to remain stable due to the current low cost of coal, we believe that the risk of earnings uncertainty would only be addressed by the FCPT mechanism,” it said.
The research house said Tenaga's FY14 revenue increased 15.2% on-year on the back of the 2.5% increase in volume of electricity sold. Despite the slower volume growth in FY14 (FY13: 3.8% on-year), FY14 revenue was strong, thanks to the tariff hike that was implemented at the beginning of FY15.
The lower electricity volume growth was due to the decline in usage by the electronics (-3.0% on-year), iron and steel (-13.1% on-year) sectors.
The FY14 opex increased 13.9% on-year due to higher fuel costs.
“Overall generation costs increased by 17.5% on-year as a result of higher LNG usage. After stripping out the forex gains, one-off writebacks from Liberty Power Ltd and tax reinvestment allowances, Tenaga's FY14 core net profit was RM4.7bil,” it said.
http://www.thestar.com.my
