CIMB Research maintains 'trading buy' on Tenaga, ups target price to RM8.40

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KUALA LUMPUR (Oct 11): CIMB Research has maintained its "trading buy" rating on Tenaga Nasional Bhd at RM7 and raised its target price for the stock to RM8.40 (from RM7.98) and Tenaga’s success in its Prai bid was a positive surprise as 1MDB put in the lowest bid.
“However, we believe technical and financial differences led to a Tenaga victory. The regulator also renewed the power plant contracts for Genting Sanyen Power and Segari Energy Ventures,” it said in a note Thursday.
“We now value Tenaga at 1.37 times CY13 P/BV, applying a lower 15% discount (35% previously) to the 10-year average as reforms have gained traction.
“Tenaga is not an outperform due to election risks. Lower coal prices and further reforms are potential catalysts for the stock,” it said.