Results Note � Tenaga (BUY, maintain)
- A modest set of results, FCPT is key to a re-rating
Notwithstanding a higher 9MFY08/14 revenue of
RM31.1bn (+12.6% yoy), Tenaga�s 9MFY14 core net profit came in 1.4% weaker yoy at
RM3.5bn due to higher operating costs (higher pipe gas and LNG prices, higher
consumption of gas, unplanned shutdowns in several coal-fired power plants,
and lower availability of hydro energy). Sequentially, Tenaga�s 3QFY14 core net profit grew by a commendable 39.9% to
RM1.4bn driven by a higher revenue (+15%), higher operating leverage, and
lower core effective tax rate. Overall, the results are broadly within our
expectations but below consensus forecast. Management remains optimistic on a
fuel-cost pass-through (FCPT) review where Tenaga will be compensate for the
higher generation costs via either a tariff hike or other form of
compensations. We share management�s optimism and maintain our BUY rating with an unchanged
TP of RM14.70
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