KUALA LUMPUR (January 14): Tenaga Nasional Bhd (TNB) gained as much as 2.1% after a ratings upgrade by CIMB Investment Bank Bhd, which kept a positive near-term outlook for the stock.

As at 10.41am, TNB had risen 24 sen or 1.7% to RM14.46, with some 4.5 million shares done. Earlier, the stock climbed as much as 30 sen or 2.1% to RM14.52 and was among the top gainers on the board.

In a note today, CIMB Investment Bank Bhd upgraded its rating on TNB to “add” from “hold”, with a higher target price (TP) of RM15.92, compared to RM13.62 previously.

“Given the improved near-term earnings outlook and jittery market conditions, we think that TNB will post positive share price performance in the next 3 to 6 months, as investors seek stable earnings after the rout of oil and gas stocks,” said the research house.

Despite the lack of tariff hikes, CIMB said the earnings outlook for TNB in the short term is stable supported by the improvement in coal usage after the recovery of its power plants, the coming onstream of its Manjung 4 power plant by March 2015, and weaker liquefied natural gas and coal prices.

However, for the longer term, CIMB said that the fuel cost pass-through (FCPT) mechanism must be implemented in order for TNB to protect its earnings.

“We believe that the FCPT could be revived, as the low fuel costs currently may result in Tenaga lowering its tariff and thus, passing on cost savings to the public,” it said.

Maybank Investment Bank Bhd (Maybank IB) also named TNB as one of its top picks for 2015 during its recent market outlook briefing, as the research house recommends investors shift to high-yield stocks amid the volatile market.

Maybank IB has a “buy” call on TNB, with a target price of RM16.00.