Tenaga inches up, tariff worries overblown

Tenaga inches up, tariff worries overblown

Tags: OSK Research | tariffs | Tenaga

Written by Joseph Chin
Friday, 08 January 2010 09:50

KUALA LUMPUR: Shares of TENAGA NASIONAL BHD [] rose in early trade on Friday, Jan 8 after OSK Investment Research said investors' worries about the tariffs were overblown.

At 9.44am, Tenaga was up three sen to RM8.23. There were 165,100 shares done.

On Thursday, Tenaga closed at RM8.20, its lowest since October last year as investors were concerned that it would not be able to get its proposed tariffs approved by the government. It hit an intra-day low of RM8.08.

"While we are maintaining our forecasts with an assumption of there being no tariff hike and coal at US$88 per tonne unchanged, we carried out a sensitivity analysis just to determine whether tariffs or cold weather would have a bigger impact on Tenaga," it said.

OSK Research said tariffs have a far larger impact on Tenaga's core net profits as well as its discounted cashflow-based fair value.

Even if cold weather does bring about a temporary spike in coal prices, the impact to Tenaga was not that significant while the lack of a tariff hike may mean some short-term knee jerk selling but ultimately this would have no impact to our earnings forecast.

"We believe that coal prices are still manageable for now and our forecasts do not include the effects of a tariff hike and therefore, any delay would also not impact on our estimates, our fair value or Buy call. Any selling should be viewed as an opportunity to Buy into weakness," it said.

http://www.theedgemalaysia.com/business-news/157055-tenaga-inches-up-tariff-worries-overblown.html