TENAGA (5347) TENAGA NASIONAL BHD
KUALA LUMPUR: Maybank Investment Bank Research estimates Tenaga Nasional’s fourth quarter 2014 (4QFY14) core net profit to be about RM1.5bil.
It said on Monday the earnings, to be released on Thursday, were expected to have risen 100% on-year, but down 4% on-quarter which would be 29% of its FY14 forecast.
“The benefits from higher coal-fired generation (up 22% on-quarter) would more than offset seasonally higher costs and potentially higher taxes. Reiterate BUY with an unchanged RM14 target price,” it said.
Maybank Research expected FY14 core net profit to be RM5.45bil (up 36% on-year), 5% higher than its forecast.
It estimated 4QFY14 power generation totalled 29,630GWh (up 4% on-year, up 1% on-quarter), with gas and coal accounting for 49% and 46% respectively.
Gas consumed averaged 1,225 mmscfd (down 12% on-year, down 2% on-quarter), below the 1,300mmscfd threshold. Tenaga’s coal cost should again remain benign, with the Newcastle benchmark having averaged US$70 a tonne in the quarter (down 12% on-year, down 5% on-quarter).
“We have highlighted Tenaga’s more favourable 4QFY14 fuel mix (the major coal plants have resumed operations) in our previous notes.
“In our view, this should more than offset 1) cyclically higher expenses in fiscal 4Q and, 2) potentially higher taxes,” it said.
Maybank Research said Tenaga is presently benefitting from the lack of a fuel-cost pass-through mechanism, thus earnings risk is skewed to the upside.
At the current run-rate, it estimated Tenaga would have clawed back its “higher-than-budgeted” 1H14 LNG costs by October 2014, thus negating the need for a tariff hike in the near future.
“Our target price (RM14) implies an FY15 price-to-book of 1.9 times and price-to-earnings ratio of 14.8 times,” it said.
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