Tenaga shares hit all-time high after record dividend

KUALA LUMPUR: Shares of Tenaga Nasional Bhd (TNB) hit an all-time high on Friday as investors focused on a record dividend and ignored a marginally lower earnings in its latest quarterly report. 

The utility giant saw its shares jumped 94 sen, or 6.69%, its biggest move since 2015 to a record high of RM15.30, giving it a market capitalisation of RM87.14bil. It has risen some 10% so far this year. 

Dealers said news sentiment about TNB was high especially after announcing a record dividend of RM3.5bil. The analysts consensus rating for TNB is equivalent to buy. It is currently trading at 12.5 times trailking 12-month earnings per share and 12 times its estimates for next year. 

Affin Hwang Capital Research said  the dividend came as a positive surprise as the full year dividend of 61 sen was above the 51 sen consensus expectations.

“We view the decision to pay out at the higher end of the pay-out range as positive, as it indicates that management is confident that the ICPT mechanism will continue smoothly despite the uncertainty pending GE-14,” it said.

TNB has revised its existing dividend policy, from a dividend payout ratio of 30-50% to 30-60%. A final dividend per share (DPS) of RM0.44 was proposed, bringing its 12MFY17 DPS to 61 sen.

CIMB Research said the DPS translated into a decent dividend yield of 4.3% and a dividend payout of 50%, above its forecasted payout of 40%. 

“We believe the dividend payout is sustainable; as such, we revise up our dividend forecast assumptions (from 40% payout to 50% payout) for FY17-19F,” it said. 

TNB, which adopted a new dividend policy for the financial year ended Aug 31, 2017 (FY17), has announced a record annual dividend payout of RM3.5bil.

The biggest single boost comes from the final dividend of 44 sen proposed on Thursday - double that of last year - despite TNB achieving a lower net profit in the fourth quarter (Q4).

The final dividend payout of RM2.49bil, compared with RM1.24bil a year earlier, will be higher than even the company’s earnings for the quarter under review.

TNB reported a RM1.72bil earnings in fourth quarter ended Aug 31, down 2.4% from a year ago, on the back of 10.9% higher revenue of RM12.46bil.

The latest result brought TNB’s full-year earnings to RM6.90bil, which was 6.3% lower than in the preceding year. Revenue, meanwhile, increased 6.5% to RM47.42bil.
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