TENAGA surges in early trade

Shares of TENAGA NASIONAL BHD [] surged to RM9.12 in early trade on Monday, Sept 13 as analysts viewed there was more upside for the power giant.

At 9.28am, it was up 17 sen to RM9.12 with 278,000 shares done. There were 206 gainers, 67 losers and 139 stocks unchanged.

The 30-stock FBM KLCI was up 9.79 points to 1,447.57. Turnover was 68 million shares valued at RM96 million. There were 206 gainers, 67 losers and 139 stocks unchanged.

AmResearch had recently reiterated its BUY call on Tenaga with an unchanged fair value of RM10 a share, based on a 10% discount to DCF of RM11.10 a share.

AmResearch said it continued to like Tenaga due to the following:

(1) Stronger power consumption growth - a 1-ppts increase could lead to a 3% earnings enhancement;

(2) A strengthening ringgit which enhances earnings by 12% for a 10% ringgit appreciation;

(3) Improving economies of scale with declining power reserve margin - currently at 42%;

(4) Possibility of an electricity and gas tariff adjustment towards the year-end;

(5) Higher dividend payout; and

(6) Return of foreign investors, as their holdings rose from 8.5% in January 2010 to 11.2% in July this year.


Written by Joseph Chin
The Edge Malaysia