Analysts bearish on TNB Q2 earnings

  • Business
  • Wednesday, 15 Apr 2009

PETALING JAYA: Analysts are generally expecting lower earnings from Tenaga Nasional Bhd (TNB), which will announce results for its second quarter ended Feb 28 today.

HwangDBS Vickers Research advised investors to look beyond TNB’s expected weak earnings in the second-quarter results and focus on a promising financial year ending Aug 31, 2010 (FY10) earnings.

The research house expects a potential recovery in power demand following the Government’s pump-priming efforts, savings from the recent gas price cut and the upside from lower coal cost.

It added that TNB could benefit from any upswing in the equity market given its liquidity.

“We expect TNB’s second-quarter results to be lacklustre with core profit of RM505mil due to slower power demand growth from the industrial segment, higher fuel costs and higher capacity payments due to the commencement of Jimah power plant from January onwards, as well as the weaker ringgit exchange rates against the US dollar,” HwangDBS said.

It estimated that for every 1% change in demand growth assumption, TNB’s FY09 forecast net profit would be reduced by 9%.

For the first quarter ended Nov 30, TNB reported RM942.4mil in operating profit but, after accounting for a forex loss of RM1.439bil, it ended up with a net loss of RM944.1mil for the period.

K&N Kenanga, in its latest note, expected TNB’s second-quarter net profit to be in the black on the back of lower forex losses. It estimated TNB’s forex losses of RM127mil for the quarter under review.

Kenanga said in the quarter the US dollar had appreciated between 2.2% and 0.2% against yen, versus 6.8% and 22.8% in the first quarter.

The research house expects TNB’s first-half net profit to continue to be in the red given the huge RM1.44bil forex loss posted in the first quarter. “We are expecting a net profit of RM1.05bil for FY09,” it said.

Kenanga said although TNB had not given analysts’ guidance for the second-quarter coal cost, it expected the average coal prices to trend downwards.

It is also expecting a flat growth or decline in second-quarter reccuring net profit as lower revenue negates savings from lower coal costs, if not more.

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