HwangDBS Vickers Research has maintained a "buy" call on Tenaga Nasional Bhd (TNB) shares due to a strong earnings recovery forecast for this year with the RM2 billion compensation and improving gas supply.
In a research note today, HwangDBS pegged the target price at RM7.00 per share.
It said that TNB's power unit sales for the first quarter this year grew 3.7 per cent year-on-year, supported by industries and commercial users.
Revenue grew by 12.5 per cent after the seven per cent average tariff hike effective June 1, last year, said HwangDBS.
"We expect stronger earnings for the next few quarters as TNB books compensation and gas supply improves to 1,150 million standard cubic feet per day (mmscfd)," it added.
The research house said the RM2 billion compensation will be booked in quarter two and TNB will continue to claim if the gas supply is below 1,350 mmscfd.
"The compensation demonstrates TNB's ability to pass on cost increases," it said.
It also noted that the gas shortage should be resolved after completion of the new regas plant by Petronas Gas Bhd in July. -- Bernama
In a research note today, HwangDBS pegged the target price at RM7.00 per share.
It said that TNB's power unit sales for the first quarter this year grew 3.7 per cent year-on-year, supported by industries and commercial users.
Revenue grew by 12.5 per cent after the seven per cent average tariff hike effective June 1, last year, said HwangDBS.
"We expect stronger earnings for the next few quarters as TNB books compensation and gas supply improves to 1,150 million standard cubic feet per day (mmscfd)," it added.
The research house said the RM2 billion compensation will be booked in quarter two and TNB will continue to claim if the gas supply is below 1,350 mmscfd.
"The compensation demonstrates TNB's ability to pass on cost increases," it said.
It also noted that the gas shortage should be resolved after completion of the new regas plant by Petronas Gas Bhd in July. -- Bernama
