TNB rises most in 9 months after upgrade

AmResearch says Tenaga's second-quarter earnings will exceed estimates while CLSA raises Tenaga's rating to 'outperform' and lifts the share-price estimate to RM9.60 from RM8.20


Tenaga Nasional Bhd (TNB) (5347), Malaysia's biggest power producer, rose the most in nine months after AmResearch Sdn Bhd said its second-quarter earnings will exceed estimates and CLSA Asia-Pacific Markets upgraded the stock.

The shares climbed 3.8 per cent to RM8.41 at 11.43am on Bursa Malaysia, set for their biggest gain since July 10. The stock was the biggest gainer yesterday, closing at RM8.38, which was 28 sen higher than Monday's closing price of RM8.10.

Earnings for the second quarter ended February 28, expected later this month, will be "stronger than expected due to a sharp rebound in electricity demand growth," AmResearch analyst Alex Goh said in a report yesterday. There is an "incoming wave of catalysts" that will boost the stock, he said.

State-controlled TNB is benefiting from a recovery in power demand after Southeast Asia's third-largest economy emerged from its first recession in a decade in the last quarter.
The economy may expand by between 4.5 per cent and 5.5 per cent this year after contracting 1.7 per cent in 2009, Bank Negara Malaysia said in its annual report on March 24.

CLSA raised Tenaga's rating to "outperform" from "underperform" and increased the share-price estimate to RM9.60 from RM8.20, according to data compiled by Bloomberg.

Power consumption growth surged 14 per cent in the second quarter compared with the same period a year earlier, AmResearch's Goh said in the report. A stronger ringgit also helped reduce fuel and interest costs, he said.

The ringgit has risen 6.4 per cent this year, the best performer among Asia's most actively traded currencies. - Bloomberg