KUALA LUMPUR (July 28): Tenaga Nasional Bhd fell as much as 12 sen or 0.8% after the state-controlled utility said third quarter net profit dropped 15% from a year earlier. Analysts downgraded Tenaga on its latest financials.

Tenaga shares fell to their lowest so far today at RM14.12. At 9:27am, the stock pared losses at RM14.18 with 54,100 shares traded.

Yesterday, Tenaga said net profit declined to RM1.96 billion in the third quarter ended May 31, 2017 from RM2.31 billion. Nine-month (9MFY17) net profit dropped to RM5.18 billion from RM5.61 billion a year earlier.

Today, CIMB Investment Bank Bhd analyst Mohd Shanaz Noor Azam said Tenaga's 9MFY17 core net profit was below expectation at 73% and 71% of CIMB's and consensus full-year forecast respectively.

"We cut our FY17-19F EPS by 3-5% to account for a potentially higher effective tax rate in view of a reduction in tax reinvestment allowance. 

"Following the earnings revision, we keep our Add call with a lower RM15.70 TP (from RM16.30), still based on 12.5x CY18 P/E, 5-year historical mean. We still believe its earnings will not be affected by the rising fuel cost. The stock trades at 11x CY17 P/E, making it the cheapest big-cap utilities stock in our coverage," Mohd Shanaz said.