Friday, 9 March 2012

CIMB Research upgrades Tenaga from Hold to Trading Buy, TP

KUALA LUMPUR (March 9): CIMB Equities Research is more positive about TENAGA NASIONAL BHD [] after its sector review as it will gain the most from reform initiatives.

The research house said on Friday a shift of the gas subsidy from Petronas to the government will lower the chances of future gas supply shocks and a power purchase agreement (PPA) extension could raise FY13 core EPS by up to 30%.

“We upgrade Tenaga from Hold to Trading Buy after raising our target price-to-book value from 1.1 times to 1.3 times, which is a 35% discount to its long-run historical average. This accounts for our more positive outlook.

“Our target price goes up from RM6.47 to RM7.65. As the September PPA deadline approaches, we expect a build-up of positive news,” it said.

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