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.
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.
