KUALA LUMPUR: Maybank Investment Bank Bhd Research (Maybank IB) sees more challenges ahead for TENAGA NASIONAL BHD [] and has a Sell call with an unchanged target price of RM7.50.
The research house said on Friday, Oct 29 that its 4Q net profit plunged 23% on-quarter to RM414 million on seasonally high "other costs" and rising coal prices.
"The final dividend was raised to 20 sen/share, but the 3% gross full-year yield is still not particularly compelling. We tweak our EPS forecasts on post-result housekeeping and still expect FY11 net profit contraction on higher coal prices," it said.
Maybank IB Research said the market had focused on its low 13% foreign ownership and gains from a weak US dollar.
"However, we see higher coal prices and gas supply constraints as the key issues. We maintain our below-consensus earnings forecasts. It could be even worse if gas supply constraints force Tenaga to burn costly distillate to meet power demand growth," it said.
The research house said on Friday, Oct 29 that its 4Q net profit plunged 23% on-quarter to RM414 million on seasonally high "other costs" and rising coal prices.
"The final dividend was raised to 20 sen/share, but the 3% gross full-year yield is still not particularly compelling. We tweak our EPS forecasts on post-result housekeeping and still expect FY11 net profit contraction on higher coal prices," it said.
Maybank IB Research said the market had focused on its low 13% foreign ownership and gains from a weak US dollar.
"However, we see higher coal prices and gas supply constraints as the key issues. We maintain our below-consensus earnings forecasts. It could be even worse if gas supply constraints force Tenaga to burn costly distillate to meet power demand growth," it said.
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