Tenaga powers FBM KLCI winning streak

KUALA LUMPUR: The market on April 6 extended its rally for the 11th day running, hitting a fresh two-year high powered by TENAGA NASIONAL BHD [] and other key blue chips as well as oil and gas players.

The FBM KLCI rose 0.2% or 2.62 points to 1,344.37 after hitting an intra-day high of 1,346.23, its highest level in two years. This was after the index had slipped into negative territory earlier in the morning on some mild profit-taking but had recovered by midday.

Other major gainers included MALAYAN BANKING BHD [] which added two sen to RM7.52, AMMB HOLDINGS BHD [] up four sen to RM5.07, RHB CAPITAL BHD [] up 12 sen to RM5.89 and YTL CORPORATION BHD [] up seven sen to RM7.62.

Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi said the rally was sustainable in the short term, but suggested a trading stance.

“Rotational play on mid-caps on April 6 (Monday) spilled over to blue chips today with Tenaga leading the charge — as talk on a potential tariff hike emerged. We have a RM11.80 target for Tenaga,” he said.

Tenaga rose 3.46% or 28 sen to RM8.38, its biggest single-day gain since July 10 last year. The stock’s 52-week high was RM8.60 on July 22, 2009, after reaching a low of RM6.05 on April 8, 2009.

AmResearch in its morning call reiterated its buy on Tenaga with a higher fair value of RM10, on expectations of stronger-than-expected 2QFY10 results, which will be announced on April 29, on the back of a sharp rebound in electricity demand.

“We have raised Tenaga’s demand growth to 5% from 4% in FY10F and 6% from 5% in FY11F. This raised FY10F-FY12F net profit by 5%-8% and our DCF from RM9.90 per share to RM11.10,” it said.

AmResearch said a change in electricity tariffs would have a large impact on Tenaga’s bottomline, as a 1% increase in tariffs in the peninsula could generate a 7% increase in FY11 net profit. In comparison, a one percentage point increase in electricity demand will only lead to a 5% increase in earnings.

“But we highlight those other factors such as stronger demand growth, appreciating ringgit and rising economies of scale, which cumulatively could have as significant an impact on the company’s bottomline as a rate hike,” it added.

“Given the high stock liquidity and the stock’s heavyweight status on Bursa Malaysia, we believe there could be a revival of foreign interest over the coming quarters as the company registers strong results performances,” it said.

A quick search revealed there were 22 buy calls representing 81% of analysts polled by Bloomberg, with a 12-month consensus target price of RM9.73.

Meanwhile, regional markets mostly stayed in positive territory. The Taiwan Taiex Index added 0.79% to 8,089.65, the South Korean Kospi was up 0.06% to 1,726.09, the Shanghai Composite Index gained 0.02% to 3,158.68 while the Singapore Straits Times Index rose 0.24% to 2,975.51.

Japan’s Nikkei 225 however lost 0.5% to 11,282.32, while the Hong Kong stock market was closed. Most European markets stayed in positive territory as well in early trade.

On Bursa Malaysia, gainers beat losers by 406 to 369, while 288 counters traded unchanged. Some 1.12 billion shares valued at RM1.55 billion changed hands.

Among the top gainers were Panasonic Manufacturing Malaysia Bhd, NESTLE (M) BHD [], FRASER & NEAVE HOLDINGS BHD [], LAFARGE MALAYAN CEMENT BHD [], BOUSTEAD HEAVY INDUSTRIES CORP []oration Bhd, SUNWAY CITY BHD [], PETRA ENERGY BHD [] and ALAM MARITIM RESOURCES BHD [].

Panasonic jumped 76 sen to RM16.96, Nestle rose 38 sen to RM35, F&N added 36 sen to RM10.96, and Lafarge and BHIC gained 23 sen each to RM6.78 and RM4.39, respectively. SunCity and Petra Energy gained 21 sen each to RM3.71 and RM1.70, while Alam added 13 sen to RM1.97.

Among oil and gas players, Petra Perdana added 13 sen to RM1.73, TANJUNG OFFSHORE BHD [] was up nine sen to RM1.13 while DELEUM BHD [], DIALOG GROUP BHD [] and KENCANA PETROLEUM BHD [] rose five sen each to RM1.81, RM1.17 and RM1.67, respectively.

KUMPULAN POWERNET BHD [] was the top loser on April 6, dropping 21 sen to 44 sen. KKB ENGINEERING BHD [] lost 16 sen to RM6.28, HARTALEGA HOLDINGS BHD [] fell 14 sen to RM8.26 while NPC RESOURCES BHD [] declined 13 sen to RM1.92.

DUTCH LADY MILK INDUSTRIES BHD [], Glenealy PLANTATION []s (Malaya) Bhd and UNITED MALACCA BHD [] fell 10 sen each to RM12.20, RM4.60 and RM8.15, respectively.

SAAG CONSOLIDATED (M) BHD [] was the most actively traded counter with 49.7 million shares done. It gained half a sen to 12.5 sen. Other actively traded stocks included KNM GROUP BHD [], SCOMI GROUP BHD [], Jaks Resources Bhd and RAMUNIA HOLDINGS BHD [].

Crude palm oil futures for third month delivery fell RM10 per tonne to RM2,512 while crude oil futures fell 19 cents per barrel to US$86.43 at 6.15pm on April 6.