Monday, October 31, 2011

Tenaga off day's low, CIMB says worst over

KUALA LUMPUR (Oct 31): Shares of TENAGA NASIONAL BHD [] were off their day's low of RM5.70 on Monday as analysts believed the worst was over for the power company.

At 3.05pm, it was down four sen to RM5.82. There were 2.25 million shares done at prices ranging from RM5.70 to RM5.85.

CIMB Equities Research said the worst was over for Tenaga as a higher gas allocation in FY12 would boost its earnings.

The research house said this was offset by the lack of a complete fuel cost pass-through mechanism, which means that Tenaga has to absorb coal costs above US$85 a tonne and was susceptible to gas supply shocks.

The core net profit for the financial year ended Aug 31, 2011 was 5% below CIMB Research's'' forecast and 10% above consensus.

'We fine-tune FY12-13 EPS and introduce FY14 numbers. We raise our target price (1.1x P/BV) after rolling it over to end-2012. Our target price also goes up from RM6.00 to RM6.47. Still a HOLD,' it said.

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