KUALA LUMPUR: Tenaga Nasional Bhd
’ share price rose to its highest in three months on Friday on fund buying following the upbeat outlook for the power giant.
There were 24.43 million shares done at prices ranging from RM12.30 to RM12.76. It ended the day up 22 sen to RM12.50.
Its gains also powered the FBM KLCI up 2.14 points. The KLCI ended the day up 14.34 points, or 0.85% to 1,706.54 - its fifth day of gains.
Analysts have also been positive on Tenaga, with CIMB Equities Research saying the utility giant was its top pick following the introduction of the New Enhanced Dispatch Arrangement (NEDA).
The move could reduce Tenaga’s generation cost slightly as it introduced competition to the power players. NEDA allows power generators to lower their variable prices than those stated in the power purchase agreements and service level agreements so that their plants can be utilised and contribute additional earnings
MIDF Equities Research and Nomura have Buy calls with target prices (TP) of RM15.60 and RM16. JP Morgan Research has an Overweight and TP of RM20 – the highest among all the research houses.
Morgan Stanley has an Equal Weight with a TP of RM13.21 and Kenanga Investment Research market perform with TP at RM12.78.
ZJ Research maintained its Buy recommendation on Tenaga last month, in view of its “encouraging results” for the third quarter.
It upgraded its FY15 and FY16 earnings projections by 1.8%-2.3% to RM6.34bil and RM6.56bil respectively.
“The group’s prospects remain positive with modest electricity growth expected, which in turn is supported by a favourable fuel cost structure.
“With the impact of ICPT now reflected on a quarterly basis in its results, there is also improved earnings stability and less uncertainty.
“Moderating factors, however, include the prevailing weak Ringgit that would partially offset the advantage from the lower coal price, as well as the challenging macroeconomic outlook that could impact demand for electricity,” it said.
Other analysts expect Tenaga’s capital expenditure growth to sustain in the next two or three years as the company plans to increase capacity and participate in a 1-gigawatt gas-fired power plant.
Tenaga will also know, by the middle of this month, the results of its bid for 1Malaysia Development Bhd’s (1MDB) power assets.
In July, Tenaga submitted a proposal to buy 1MDB power assets locally and abroad through an indicative non-binding proposal that will involve the acquisition of five domestic and eight international power assets held through 1MDB’s power unit, Edra Global Energy Bhd.
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