TENAGA Nasional (TNB) reported quarter four financial year 2025 (4QFY25) core profit after tax, amortisation and minority interest (PATAMI) of RM989.1 mil, up 6.0% quarter-on-quarter (QoQ) and 105% year-on-year (YoY).
“This is largely driven by a lower effective tax rate following investment allowance utilisation under Section 7B and the resolution of prior-year tax assessments recognised in 4QFY24,” said Public Investment Bank (PIB).
Peninsular electricity demand grew 2.3% in FY25, slightly below earlier guidance of 2.8% due to continued structural weakness in the industrial segment (-5.8%), particularly in the iron and steel sector.
This was partially offset by resilient commercial growth of +10.0%, supported by data centre and services-related loads.
Despite the weakness, TNB’s regulated business remains firmly protected under the Incentive-based Regulation framework (Regulatory Period 4, RP4), providing earnings stability to support the execution of its RM42.82 bil regulated capital expenditure (capex) programme over the three-year cycle.
This position is further reinforced by the resolution of tax uncertainties and improved liquidity following the shift to monthly Automatic Fuel Adjustment (AFA).
“As such, we maintain our Outperform call with an unchanged Target Price of RM16,” said PIB.
4QFY25 electricity demand rose 4.6% YoY to 33,965GWh, although it eased 2.0% QoQ due to seasonal factors. This lifted full-year demand growth to 2.3%, falling short of the earlier 2.8% projection.
The miss was largely attributable to persistent contraction in the industrial segment (-5.8% YoY), particularly within the iron and steel sector, which continued to weigh on overall load growth.
FY25 profit after tax improved to RM421.4 mil, primarily driven by the resumption of the 1,010MW Manjung 4 coal-fired power plant following its prolonged outage in FY24.
The recovery in generation availability lifted overall output and capacity income contribution. In addition, improved fuel margin dynamics amid higher coal prices and tighter global supply conditions supported profitability during the year.
TNB spent RM12 bil on regulated capex in FY25, in line with guidance. Following the resolution of tax uncertainties and improved liquidity from the implementation of monthly AFA, TNB is now better positioned to accelerate RM42.82 bil RP4 regulated capex execution in FY26, in line with evolving demand requirements.
The increased investment will primarily focus on transmission expansion, grid modernisation and distribution reinforcement to support rising commercial and data centre loads.
The sustained capex execution will also drive Regulated Asset Base growth, underpinning earnings stability under the RP4 framework. —Feb 27, 2025
Main image: Log Masuk
