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Bursa Malaysia Market Wrap - April 18, 2008
The stock, which slid to a low of RM6.80 last month, closed at RM7 yesterday and today closed at RM6.95.
Tenaga Weekly Chart Stock Price
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KLCI Daily Chart This is the news about Tenaga Nasional one weeks before.
PETALING JAYA: Shares in Tenaga Nasional Bhd (TNB) ended flat yesterday on muted reaction to the Sabah government’s decision to drop plans to build a 300MW coal-fired power plant near Lahad Datu.
The state has also directed TNB to look for alternative sources of energy and site.
“The decision (to scrap the project) has no impact on our forecast for TNB,” said AmResearch Sdn Bhd analyst Ng Yong Yin when contacted yesterday.
TNB’s share price was unchanged yesterday at RM7.50 with six million shares transacted.
The RM1.3bil coal-fired power plant project was won by a TNB-led consortium in June last year via an open tender process carried out by the Economic Planning Unit of the Prime Minister’s Department.
The contract to build the power plant was later awarded to China National Electric Equipment Corp.
The proposed plant was expected to be operational by 2011, and was targeted to supply electricity to palm oil mills and industrial areas in the east coast region stretching from Sandakan to Tawau.
The project “is expected to boost and stabilise the Sabah state grid and supply to the eastern coastal area,” TNB said in a statement to announce that it had submitted a detailed Environmental Impact Assessment report on the project yesterday.
Among other things, the proposed coal-fired power plant would replace several existing diesel power plants in the state, which are more expensive to run due to the higher fuel price.
The project, however, drew strong opposition from environmentalist groups due to its location.
Critics also argued that Sabah could draw electricity from neighbouring Sarawak, which has several new hydroelectric dam projects in the pipeline, including the massive Bakun Dam.
With Bakun about 600km away from the east coast of Sabah, transmitting the power overland would cost significantly more than the coal-fired power plant project, sources said.
Finding a new location for the plant would also mean further delay to the project that had taken at least six years to get off the drawing board.
Meanwhile, TNB’s near-term prospects continued to be weighed down by rising coal fuel cost and its ability to adjust tariff charged to consumers.
At yesterday’s close, the stock was down 22% year-to-date versus the KL Composite Index 14% drop over the same period.
In an update on TNB yesterday, AmResearch said the immediate concerns on the group remained on the rising coal price that was expected to hit the group’s performance from the third quarter of its fiscal year ending Aug 31, 2008 (FY08) onwards.
Notwithstanding that, TNB was expected to benefit from the stronger ringgit, as about 47% of its outstanding loans are denominated in foreign currencies.
AmResearch has a target price of RM9 for TNB and a “hold” call on the stock.
The Star yesterday;
PETALING JAYA: Tenaga Nasional Bhd (TNB) shares, which have been on a downtrend since April 2, extended its losing streak yesterday.
Heavyweight TNB - a key component stock of the KL Composite Index - slipped 15 sen, or 2.05%, to RM7.15 yesterday on volume of 7.9 million shares. An analyst said the counter took a big hit after the shocking general election results.
“However, the decline in its share price accelerated after the Sabah government decided to scrap the controversial RM1.3bil coal-fired power plant,” the analyst said, adding that the stock price was expected to remain range-bound unless new developments arose.
Another analyst said although there was some selling yesterday, investors could be buying into the stock again after the slight decline, adding that the company's fundamentals were still intact.
The utility company's market capitalisation (cap) had dropped to RM31.8bil as at March 31, making it the eighth largest company on Bursa Malaysia in terms of market cap. As at end-February, TNB was the fourth largest company.
Meanwhile, RHB Research said in a report that TNB's bottomline was unlikely to be affected by the loss of the project.
“We highlighted that the project was insignificant to TNB, accounting for 2.7% of its capacity. Therefore the loss of the project also has minimal impact on TNB's earnings,” it said.
RHB Research maintained its “market perform” call on TNB with a target price of RM8. “Longer term, we believe there is potential upside if the government approves a tariff hike to cover TNB's higher cost of coal,” it said.
“The positive implication of this event was that the project was fraught with controversy from the beginning. Not only was the price tag expensive, the minority shareholders of the project also seemingly had no experience in the power business,” JP Morgan said in its report.
MIMB Investment Bank said a tariff hike would not seem possible in the near term, meaning that rising coal prices would erode its earnings.
“Spot coal prices have hit record high at US$120 (about RM381) per tonne, which is double from a year ago.
“We do not expect the industry-wide reforms, including a fuel-cost pass-through mechanism, to conclude at least in the next year. Hence, we are raising our coal price assumptions for the financial year ended Aug 31 (FY08) and FY09 to US$68 and US$75 per tonne respectively from US$60 per tonne,” it said in a report.
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