Monday, 15 November 2010

OSK Research maintains Buy on Tenaga, FV RM9.76

OSK Research maintains Buy on Tenaga, FV RM9.76
Written by Joseph Chin
Monday, 15 November 2010 16:16

KUALA LUMPUR: OSK Research is maintaining its Buy on TENAGA NASIONAL BHD [] with a fair value of RM9.76 following the latest development that the power giant's proposed Lahad Datu coal plant is suspended.

At 4.08pm, Tenaga is up one sen to RM8.52 with 4.11 million shares done on Monday, Nov 15.

OSK Research issued the flash note after the Sabah Environment Minister had said that as far as he was concerned the project was suspended.

“This latest news come as no surprise. We do note however, that there has been a short sharp selldown on TNB last week for which we cannot really indentify a clear reason. This news may have contributed as well as the weakness in the Ringgit.

“In our model, sensitivity analysis shows that for every 1% weakness in ringgit, TNB’s net profit are cut by 1.5% due to higher coal costs. However, the strength in USD should be offset somewhat by weakness in coal prices,” it said.

OSK Research said in any case, its assumptions are very conservative already at US$100 coal price at RM3.13 to the USD for FY11.

“We also note that TNB is a rare post election stock as AFTER the elections, tariff may well go up. Our sensitivity shows for every 1% hike in tariff, TNB’s net profits are raised by 7%,” it said.

No comments: