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Singapore Investment

TENAGA 5347 TENAGA NASIONAL BHD remains favourable among investors with stable earnings, dividend payouts

KUALA LUMPUR (Dec 24): Tenaga Nasional Bhd's (TNB) stock remains favourable among analysts given its stable earnings and dividend payout.

Hong Leong Investment Bank (HLIB) has maintained a "buy" call on the stock given the company's stable earnings and dividend payout in the financial year 2023 (FY2023).

"TNB’s earnings are expected to remain stable in FY2023. We are positive with TNB’s long-term commitment to its environmental, sustainability and governance (ESG) growth path, while ensuring returns to shareholders," HLIB said in a note.

CGS-CIMB said TNB's dividend payout policy of between 30% and 60% is intact based on its adjusted profit after tax and minority interest (Patami). The group has been paying out more than 50% of its adjusted Patami as dividend since 2018.

"We gather that TNB aims to distribute dividend towards the higher end of the dividend policy band. Our target price remains at RM13.60. We like TNB as it has decent dividend yields of more than 5% for FY2022-FY2024F. It is poised to benefit from Malaysia’s energy transition. For instance, additional grid investments and renewable energy (RE) opportunities could boost its earnings and improve the public’s ESG perception of TNB," it added.

Universiti Utara Malaysia (UUM) School of Economics, Finance and Banking senior lecturer Muhammad Ridhuan Bos Abdullah told Bernama that TNB should be evaluated from two perspectives: as a firm for profit maximisation and a national utility provider.

Muhammad Ridhuan said TNB has social obligations and it is important for the utility company to stick to them for the benefit of the people and country.

TNB has steadily paid out dividends to shareholders over the years, most notably at the start of the Covid-19 pandemic in 2019 and at the peak of the pandemic in 2020.

The national utility corporation declared a final dividend of 20 sen per share and a special dividend of 50 sen per share, which brings FY2019 total payout to RM5.69 billion for the same year, the highest dividend payout to date.

In FY2020, TNB declared a final single-tier dividend of 18 sen per ordinary share and a special single-tier dividend of 40 sen per ordinary share, which totalled about RM3.31 billion, while for FY2021, it declared a final dividend of 18 sen per share, which amounted to a RM1.03 billion dividend payout.

These steady dividend payouts have benefited investors, among which were the Employees Provident Fund, Permodalan Nasional Bhd, Retirement Fund Inc, Social Security Organisation and Khazanah Nasional Bhd, being the largest.

TNB is also one of the heavyweights listed on Bursa Malaysia with a market capitalisation of RM52.3 billion as at Dec 23, 2022.

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