Wednesday, September 14, 2011

AmResearch maintains Buy on Tenaga

KUALA LUMPUR: AmResearch is maintaining its Buy call on Tenaga Nasional with an unchanged discounted cashflow-derived fair value of RM6.40 per share.

The research house said on Wednesday, Sept 14 Tenaga president and chief executive officer Datuk Seri Che Khalib was quoted saying the power company will have to raise money from the banks for the first time to pay for its operational expenses due to the ongoing natural gas shortage.

He was quoted saying Tenaga had spent close to RM2.1 billion from January 2010 to August 2011 to substitute gas with distillates as a temporary measure to continue generating power given the natural gas shortfalls.

'Tenaga expects the additional cost for distillates, which is five times more expensive than natural gas, to reach an estimated RM3bil by the end of this year,' it said.

Tenaga's net gearing is currently comfortable at 45% as at 31 May 2011 compared with 194% in FY04 when Khalib first joined the group as its CEO. Its net debt has likewise fallen from RM29 billion'' as at end-FY04 to RM13 billion currently.

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