AffinHwang Capital maintains Buy on Tenaga, ups target price to RM16.50

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KUALA LUMPUR (Nov 3): AffinHwang Capital Research has maintained its Buy rating on Tenaga Nasional Bhd at RM13.36 with a higher target price of RM16.50 (from RM14.70) and said Tenaga’s FY14 results were above house expectations.

In a note Monday, the research house said it reaffirmed its positive view on Tenaga, one of its top picks, on a favourable fuel-generation mix amid a rebound in electricity demand.

“The outlook for FY15 looks fairly positive as management expects electricity-sales growth to rebound to 5-6% (FY14: +2.5%).

“The EBITDA margin should remain stable (FY14: 26.8%) as management expects coal costs to remain steady at around US$70/MT.

“In our view, this bodes well for Tenaga as the 1,000MW Manjung 4 coal-power plant is on track to be operational on 31 Mar 2015. This will likely decrease Tenaga’s reliance on the more expensive LNG and other alternative (oil and distillates) fuel,” it said.