CIMB Research advises investors buy into more defensive sectors like utilities (Tenaga Nasional) and construction (Gamuda)
KUALA LUMPUR: Tenaga Nasional Bhd
's earnings more than doubled in the fourth quarter ended Aug 31, 2016 to RM1.76bil and it declared a final dividend of 22 sen a share, underpinned by the stronger ringgit versus the US dollar and lower liquified natural gas (LNG) price.
The power giant said on Thursday that earnings rose 114% from RM820.90mil in the previous corresponding period. Earnings per share doubled to 31.22 sen from 14.55 sen.
However, revenue fell 4.3% to RM11.23bil from RM11.74bil a year ago. This was despite the increase in sales of electricity of RM236.3mil or 2.1%.
“The significant drop in revenue was mainly due to higher amount of over-recoverability of ICPT (imbalance cost pass-through tariff rebate) recognised during the current quarter amounting to RM856mil as compared to RM34mil recognised in the corresponding quarter,” it said.
Tenaga said the increase in the over-recoverability of ICPT was mainly attributable to the lower average price of LNG in the current quarter versus a year ago.
Tenaga's foreign exchange translation loss narrowed to RM114.8mil from RM733.5mil a year ago.
For the financial year ended Aug 31, 2016 its earnings rose 20.4% to RM7.367bil from RM6.118bil in the previous financial year. Revenue climbed nearly 2.9% to RM44.53bil from RM43.28bil.
“The improvement was primarily due to 4.0% electricity demand growth in Peninsular Malaysia, contributed mainly by warm weather condition which occurred during the third quarter of FY2016,” it said.
Forex translation loss also narrowed to RM390mil from RM819.3mil in FY15.
Tenaga pointed out that during the year, there were six generation projects carried out that contributed to the higher investment in capex of RM11.39bil as compared to RM10.77bil invested last year.
Out of the six, the group had successfully commissioned four projects with total capacity of 1,892MW.
“The capex investment will ensure that the nation’s energy capacity requirement is met and the overall system efficiency, security and reliability are maintained,” it said.
During the year, there was a 2.9% increase in revenue at RM44.53bil. However, operating expenses remained stable and rose 1.9% to RM36.17bil from RM35.48bil a year ago, despite the 4.0% electricity demand growth in Peninsular Malaysia.
Tenaga president and CEO Datuk Seri Azman Mohd said this year’s performance was mainly contributed by positive momentum in Peninsular Malaysia electricity demand.
“However, towards the end of the year we have seen that the electricity consumption pattern have reverted back to its normal trend with the changing weather pattern. Moving forward, we expect that electricity demand will continue to increase in tandem with the country’s economic growth,” he said.
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