KUALA LUMPUR (April 28): Tenaga Nasional Bhd may post stronger results in the second half of its financial year ending Aug 31, 2017 (2HFY17), on seasonally-higher electricity sales volume and positive accrued revenue adjustment.

In a note today, CIMB Investment Bank Bhd analyst Saw Xiao Jun said state-controlled utility Tenaga's positive accrued revenue adjustment involved the difference between estimated and actual billing of electricity usage.

"We maintain our Add call on Tenaga (shares), as we believe its earnings will not be affected by rising fuel cost. It trades at 11x CY17 P/E, making it the cheapest big-cap utilities stock in our coverage. The key downside risk to our call is a sell-down of Malaysian equities, as Tenaga is often seen as a proxy for the Malaysian stock market.

"We make no changes to our (Tenaga) EPS forecasts and target price (at RM16.30), still based on 12.5x CY18 P/E, its 5-year mean," he said.

CIMB's note followed Tenaga's announcement yesterday on its 2QFY17 financials. Tenaga said 2QFY17 net profit rose to RM1.48 billion, from RM1.32 billion a year earlier, while 1HFY17 net profit fell to RM3.22 billion, from RM3.3 billion. 

Tenaga proposed a dividend of 17 sen a share for the quarter in review. Today, Saw said Tenaga’s 1HFY17 core net profit "broadly met expectations at 47% of our full-year forecast and 45% of consensus."

TA Securities Holdings Bhd analyst Kylie Chan Sze Zan said Tenaga's 1HFY17 core net profit at RM3.8 billion was within TA's and consensus forecast. Chan said Tenaga's 1HFY17 core net profit accounted for 51% and 50% of TA's and consensus annualised full–year forecasts, respectively.

"Overall, it was a decent set of results, underpinned by efficient cost management and steady demand," Chan said.