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 TENAGA 5347 TENAGA NASIONAL BHD performs as expected in Q1

RHB Research said Peninsular Malaysia electricity demand continued to recover in Q1 2022 and was expected to grow 1.7 per cent year-on-year (Y-o-Y) in 2022.

KUALA LUMPUR: Tenaga Nasional Bhd's (TNB) first quarter (Q1) core net profit of RM891 million has come in within RHB Research's expectations by 20 per cent and 19 per cent of street financial year 2022 (FY22) estimates.

RHB Research said Peninsular Malaysia electricity demand continued to recover in Q1 2022 and was expected to grow 1.7 per cent year-on-year (Y-o-Y) in 2022.

The firm said besides that, generation cost had doubled Y-o-Y in Q1 2022 due to higher gas and coal prices.

It said, however, the impact to TNB was neutral as volatility in fuel costs was covered under the Imbalance Cost Pass-Through (ICPT) framework.

"We also saw a spike in gas generation mix that has increased to 54 per cent in Q1 2022 from 36 per cent in Q4 2021 with lower coal generation mix at 39 per cent," it said in a note today.

RHB Research said TNB's current renewable energy (RE) capacity stood at 3.6 gigawatt (GW), with five per cent of total capacity, including the recent acquisition of 97.3 megawatt onshore wind portfolio in the UK.

This is still lagging behind its 8.3GW target by 2025, which suggests a more aggressive merger and acquisition (M&A) within this segment going forward.

Apart from that, TNB is also repowering its coal plant into a combined cycle gas turbine (CCGT) plant with co-firing capabilities, while progressively applying new emerging technologies to reduce carbon emissions.

"In tandem with Malaysia's transition into low-carbon mobility, TNB has either entered into a Memorandum of Understanding or collaborated with prominent partners in e-mobility, which includes the co-planning and co-deploying with charge point operators to ensure optimisation of chargers.

"TNB will open an electric vehicle charging station in Bangsar by the end of 2023," it added.

RHB Research has maintained its "Buy" call on TNB, with an unchanged target price of RM11.50.

"The stock is trading close to its seven-year low, and foreign shareholdings stood at 12.1 per cent as of March 2022," it said.

https://www.nst.com.my/business/2022/05/800946/tnb-performs-expected-q1

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