MIDF Research has increased its target price on Tenaga Nasional Bhd (TNB) (5347) to RM10.35 from RM9.60 based on the group's 13 times financial year 2011 earnings per share.
"We have upgraded our fiscal year 2010 numbers by 21.9 per cent and fiscal year 2011 by 15 per cent to reflect the strong interim results that may provide a stronger platform for the subsequent quarters," it said in a report.
TNB announced its second-quarter results, which was better than MIDF's and the market's expectation.
"The first half of its 2010 profit accounts for 65 per cent of our full year forecast of RM2.6 billion," it said.
Factors contributing to the outperformance were stronger demand growth of 8 per cent, appreciating ringgit and lower operating expenses.
Meanwhile, TNB chief executive officer Datuk Seri Che Khalib Mohamed Noh has said that Tenaga Nasional Bhd is mulling the idea of expanding the generation capacity of its Janamanjung coal plant in Manjung, Perak, to cater to future demand.
This is because it is unlikely that power supply from the Bakun hydro power plant will reach Peninsular Malaysia by 2015.