KUALA LUMPUR: Amresearch is maintaining its Hold recommendation on Tenaga Nasional, with an unchanged discounted cashflow-derived fair value of RM6.60 a share.
It said on Monday, June 13 that Petronas had issued a statement last week that it has completed the maintenance works of its gas production facilities and has begun resupplying to its customers.
This was in response to a media report that Tenaga is purchasing 180MW of electricity (1% of Tenaga's power generation capacity) from YTL Power's Power Seraya Ltd in Singapore due to a shutdown of some of Petronas' gas production platforms.
The research house quoted Petronas as saying the shutdown was a planned one and its customers were aware of it and that the maintenance works were successfully completed as per their schedules.
'The maintenance shutdown of Petronas facilities has resulted in Tenaga importing electricity from PowerSeraya Ltd, which we understand is on a take-or-pay basis at rates of around 30 Singapore sen/kWh (2.2x Tenaga's new tariff of 33.5 sen/kWh) until June 15, 2011,' it said.
Amresearch said Petronas' maintenance periods appear to be slightly longer than the schedules which it had earlier reported in April this year.
'We understand that the higher electricity costs from Singapore could be partly offset by a lower capacity charge to the Tanjung Bin plant, which has a minimum availability period.
'But this still means that Tenaga may be experiencing a contraction in supply to 850mmscfd (32% below the agreed 1,250mmscfd threshold) for at least a month in 2HFY11. Management indicated that the gas supply should normalise by July this year, hence the purchase agreement from Power Seraya is only for a short duration,' it said.
The research house said as it had already incorporated higher coal usage in 2HFY11, its FY11F earnings ' which is 17% below street estimates ' appear achievable for now. The stock currently trades at a fair CY11F PE of 12 times, which is within Tenaga's one-year forward PE band of 11 times to 16 times.
It said on Monday, June 13 that Petronas had issued a statement last week that it has completed the maintenance works of its gas production facilities and has begun resupplying to its customers.
This was in response to a media report that Tenaga is purchasing 180MW of electricity (1% of Tenaga's power generation capacity) from YTL Power's Power Seraya Ltd in Singapore due to a shutdown of some of Petronas' gas production platforms.
The research house quoted Petronas as saying the shutdown was a planned one and its customers were aware of it and that the maintenance works were successfully completed as per their schedules.
'The maintenance shutdown of Petronas facilities has resulted in Tenaga importing electricity from PowerSeraya Ltd, which we understand is on a take-or-pay basis at rates of around 30 Singapore sen/kWh (2.2x Tenaga's new tariff of 33.5 sen/kWh) until June 15, 2011,' it said.
Amresearch said Petronas' maintenance periods appear to be slightly longer than the schedules which it had earlier reported in April this year.
'We understand that the higher electricity costs from Singapore could be partly offset by a lower capacity charge to the Tanjung Bin plant, which has a minimum availability period.
'But this still means that Tenaga may be experiencing a contraction in supply to 850mmscfd (32% below the agreed 1,250mmscfd threshold) for at least a month in 2HFY11. Management indicated that the gas supply should normalise by July this year, hence the purchase agreement from Power Seraya is only for a short duration,' it said.
The research house said as it had already incorporated higher coal usage in 2HFY11, its FY11F earnings ' which is 17% below street estimates ' appear achievable for now. The stock currently trades at a fair CY11F PE of 12 times, which is within Tenaga's one-year forward PE band of 11 times to 16 times.
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