KUALA LUMPUR: OSK Research said TENAGA NASIONAL BHD []'s 1QFY11 core net profit came in above its forecast and consensus as it expected the subsequent quarters to be poorer due to rising coal prices.
'While demand growth still looks reasonable at above 4.5% and coal prices may retreat after February, the lack of transparency in terms of a tariff hike to cover the high coal prices may likely dampen demand for TNB's shares despite the 98% q-o-q profit jump,' it said on Friday, Jan 21.
OSK Research said nonetheless, based on its longer term valuation and view, TNB remains a Buy at RM6.47, with longer term expectations for an 8% tariff hike and its sensitivity of a 9.5% profit jump for every 1% increase in tariff.
In the shorter term, the coal prices may have been fully factored in and TNB may stage a mild rebound. Its target price is RM7.74.
'While demand growth still looks reasonable at above 4.5% and coal prices may retreat after February, the lack of transparency in terms of a tariff hike to cover the high coal prices may likely dampen demand for TNB's shares despite the 98% q-o-q profit jump,' it said on Friday, Jan 21.
OSK Research said nonetheless, based on its longer term valuation and view, TNB remains a Buy at RM6.47, with longer term expectations for an 8% tariff hike and its sensitivity of a 9.5% profit jump for every 1% increase in tariff.
In the shorter term, the coal prices may have been fully factored in and TNB may stage a mild rebound. Its target price is RM7.74.
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