KUALA LUMPUR (Dec 19): The power tariff revision is not expected to have a major impact on Tenaga Nasional Bhd’s (TNB) earnings, as the Government has continuously upheld the Incentive Based Regulation framework and Imbalance Cost Pass-Through (ICPT) mechanism, said analysts.
CGS-CIMB Research said TNB’s management had guided that its cash flow is still healthy, and that it has reserves to buffer the delayed payments.
“However, this news could impact near-term sentiment on TNB,” said the research house in a note on Monday (Dec 19). CGS-CIMB maintained its "add" call on the stock, with a target price (TP) of RM13.60.
Meanwhile, Maybank Investment Bank Research said ICPT concerns for TNB could dissipate further should the first half of 2023 (1H2023) pass-through materialise.
“With coal prices remaining extremely elevated, investors' attention would again centre on the upcoming ICPT announcement for 1H2023.
“Another successful pass-through would further reinforce the integrity of the mechanism, thus further alleviating the associated overhang for TNB,” it said.
Maybank IB said continued elevated coal prices mean ICPT concerns for TNB would likely resurface every six months, thus dampening sentiment. The research house has a "hold" call, with a TP of RM8.70 for the stock.
Shares in TNB rose in early trade on Monday, after the Government said it is implementing a targeted electricity subsidy that will see all domestic users continuing to enjoy the two sen per kWH rebate on their power tariff for the period of Jan 1 to June 30, 2023.
At the time of writing, TNB was up 0.66% or six sen at RM9.21 a share, with 377,500 shares traded.
Last Friday, the Government said it will also not increase the 3.7 sen per kWh surcharge on farmers and animal breeders as well as low-voltage non-domestic users such as micro businesses, and small and medium enterprises (including restaurants, groceries, bakeries and small workshops).