KUALA LUMPUR: MIDF Research and AllianceDBS Research have trimmed their earnings forecasts for Tenaga Nasional Bhd (TNB) for the financial years 2020 and 2021 (FY20 and FY21).
In a note today, MIDF Research said the revision in earnings outlook was due to the weaker-than-expected results recorded in the fourth quarter of 2019 (4Q19).
TNB’s core net profit stood at RM477 mil in the quarter, bringing FY19 net profit to RM4.7 bil, dragged down by unplanned outages, restructuring cost and higher finance cost from the commissioning of the Jimah East power plant.
“We trim our FY20 and FY21 forecast results by 9.7% and 10.3% respectively. Despite that, we expect Tenaga’s FY20F to recover by 10% given the absence of the one-off restructuring costs and assuming no more planned outages in FY20F,” it said.
The 15% discount on electricity tariff as announced in the recent economic stimulus package will be fully funded by the Electricity Industry Fund (EIF) and would have no impact on TNB’s earnings, it noted.
Overall, MIDF Research is maintaining a Buy call on TNB but with a target price revised to RM13.80 from RM14.40 per share.
Meanwhile, AllianceDBS Research said it has slashed earnings estimations on TNB for FY20 and FY21 by 5% and 4.9% respectively.
“We forecast a FY22 net profit of RM5.5 bil (+1% year-on-year) on the back of electricity demand growth of 1%,” AllianceDBS Research added.
The research house is maintaining a Hold call on TNB with a lower discounted cash flow-based target price of RM12.90 from RM13.40 per share.
At 3.50pm, TNB’s counter rose 52 sen to RM12.62 with 5.9 million shares traded. – March 2, 2020, Bernama
