Wednesday, January 5, 2011

Tenaga slips on concerns of rising coal prices

KUALA LUMPUR: Shares of TENAGA NASIONAL BHD [] slipped in early trade on Wednesday, Jan 5 on concerns of rising coal prices following a disruption in the supply from Australia.

At 9.10am, Tenaga was down four sen to Rm6.68 with 360,700 shares done.

The FBM KLCI was 0.39 of a point higher at 1,552.28. Turnover was 135.23 million shares valued at RM101.04 million. There were 196 gainers, 68 losers and 179 stocks unchanged.

AmResearch quoted Tenaga as saying the massive flood situation in Australia was disrupting coal supply from the country and is partly contributing to the rise in thermal coal prices.

'We reiterate our HOLD call on Tenaga Nasional Bhd with an unchanged DCF-derived fair value of RM7.20/share (post 1-for-4 bonus issue which went ex last week),' it said.

AmResearch said Newcastle coal spot prices have risen by 18% over the past month to US$126/tonne currently, which is 26% above its FY11F-FY13F coal assumption of US$100/tonne.

'Based on current coal prices and US$/RM exchange rate, we estimate that Tenaga's FY11F-FY13F net profits could drop by 28%-29%. For now, we maintain our forecasts pending further guidance on Tenaga's coal costs. We believe there could be seasonal factors to the spike in coal prices due to the unusually cold weather in Europe and the US,' it said.

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