TNB at six-year high, sends FBM KLCI to record

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KUALA LUMPUR: Tenaga Nasional Bhd (TNB), Malaysia’s biggest power producer, rose to a six-year high in Kuala Lumpur trading after third-quarter profit more than doubled, pushing the Southeast Asian nation’s benchmark stock index to a record.

The stock jumped 3.1 per cent to RM9.29 at 11.03am local time yesterday, poised for the highest close since June 2007.

It was the biggest gainer in the FTSE Bursa Malaysia KLCI, which added 0.4 per cent. Net income in the three months ended May surged 154 per cent from a year earlier to RM1.71 billion (US$534 million), TNB said in a statement.

CIMB Holdings Bhd and RHB Capital Bhd raised their price targets as TNB’s nine-month net income beat estimates. Profit was boosted by electricity sales, lower coal costs, foreign exchange gains and a RM592 million increase booked on compensation from the government and state oil company Petroliam Nasional Bhd for disruptions in fuel supply to its power plants.

“The pieces are falling into place,” Yeoh Yung Juen, an analyst at CIMB, wrote in a report. “Tariff reforms, stable demand and higher gas supply are catalysts” for TNB, he said.

“The prospect of TNB being allowed to increase electricity tariffs is ‘likely’ given state subsidies may be reduced,” chairman Tan Sri Dr Leo Moggie told reporters yesterday in Kuala Lumpur, where the company is based.

Prime Minister Datuk Seri Najib Tun Razak’s government temporarily froze cuts in state subsidies on essential items ahead of Malaysia’s May 5 general election, when the ruling coalition was returned to power.

It last allowed TNB to raise electricity charges to help pass on costs in 2011, the first time in almost three years.

The power producer was the most actively traded stock on the KLCI yesterday with 12.6 million shares changing hands, 94 per cent of its three-month daily average, according to data compiled by Bloomberg. The benchmark gauge has gained 6.6 per cent this year.

CIMB increased its price target to RM10.96 from RM10.20 and maintained its outperform rating, according to a report by analyst Yeoh.

AMMB Holdings Bhd raised its price forecast to RM10.45, while RHB increased its fair value to RM10.58, according to separate reports from the two banks. — Bloomberg