KUALA LUMPUR: Affin Hwang Research has maintained its Buy call on Tenaga with a target price of RM16.50 from RM14.70, reflecting the 14%-16% increases to its FY15 016E earnings after imputing a lower effective tax rate of 15% due to reinvestment allowances and our assumption of lower coal costs of US$80/MT.
In a note on Monday, the research house said it liked Tenaga for the rebound in electricity-sales growth, benign coal prices, high likelihood of TNB recovering LNG fuel costs either from the next tariff review or savings from 1st gen IPP PPA negotiations and implementation of fuel-cost pass-through mechanism.
"Tenaga’s FY14 results were above our expectations. We reaffirm our positive view on Tenaga, one of our top picks, on a favourable fuel-generation mix amid a rebound in electricity demand," it said.
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