Upward re-rating for TNB if it loses bid to buy 1MDB's power unit

Power bid: A file picture shows a view of TNB headquarters in Kuala Lumpur. CIMB Research says TNB’s share price will suffer ‘knee-jerk reaction’ if it wins the bid to buy the assets of Edra. – Reuters

PETALING JAYA: Tenaga Nasional Bhd (TNB) will enjoy an upward re-rating if it loses the bid to buy the assets of 1Malaysia Development Bhd’s (1MDB) power unit, as the market will immediately lower the risk premium attached to TNB’s valuation, according to CIMB Research.

Conversely, TNB’s share price would suffer a “knee-jerk reaction” if the utility giant won the bid to buy the assets of Edra Global Energy Bhd, the research house said, adding that this may be despite the fact that TNB’s current valuation is at a discount to its peers.