Tenaga powers market, KLCI up nearly 30pt

  • Markets
  • Friday, 29 Jun 2018

Share price is at lowest in more than 52 weeks

KUALA LUMPUR: Tenaga Nasional Bhd (TNB) powered the stock market higher on Friday as analysts were positive on the government’s move to allow it to implement a surcharge for commercial consumers.

Hopes for a window dressing as the second quarter draws to an end were boosted as Tenaga surged RM1.28 to RM14.94 with 6.07 million shares done.

The FBM KLCI jumped the most in recent months, up 29.56 points or 1.77% higher at 1,695.24.  Turnover was 679.89 million shares valued at RM504.32mil. There were 393  gainers, 182 losers and 268 counters unchanged.

TNB announced to Bursa Malaysia that companies will have to pay more for their power supply from July 1 to December 2018 following the implementation of a surcharge of 1.35 sen per kWh due to higher fuel and generation costs.

Households would be not affected by the surcharge under the imbalance cost pass-through (ICPT) mechanism.

“TNB also wishes to inform that the impact of ICPT implementation is neutral on TNB and will not have any effect to its business operations and financial position,” it said.

AmInvestment Research is maintaining its forecasts, fair value of RM17.46 based on discounted cashflow and Buy call.

The government has given its green light to TNB to raise non-domestic tariff by 1.35sen/kWh for 2H18 to partially pass through some RM698.2mil under-recovery of fuel cost in 1H18.

“While the latest development is neutral to TNB’s earnings (as TNB is entitled to pass on higher fuel cost to end-users under the ICPT mechanism, eventually), it does show that the government has the political will to raise electricity tariffs, at least for the non-domestic sector.

“The latest development will reduce the perceived regulatory risk and hence risk premium of TNB,” AmInvestment Research said.
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surcharge , ICPT , regulatory risk , risk premium


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