TNB shares touch all-time high on record dividend

Stock jumps 6.69pc to intra-day high of RM15.30 after announcement of record RM3.5b dividend

KUALA LUMPUR

TENAGA Nasional Bhd’s (TNB) share price touched its all-time high yesterday after the utility giant announced a record dividend of RM3.5 billion despite posting marginally lower earnings in its latest quarterly report.

The share price jumped 6.69 per cent to an intra-day high of RM15.30, the highest since 2015, for a market capitalisation of RM87.14 billion.

TNB net profit eased more than six per cent to RM6.9 billion for the year ended August 31, from RM7.37 billion previously, on higher financing costs and taxation.

TNB’s net profit declined slightly to RM1.72 billion in the fourth quarter from RM1.76 billion in the same period last year.

It said the 40.1 per cent yearon-year increase in financing costs was mainly due to the interest made payable to the government on power purchase agreement’s savings fund of RM130 million and accrued interest of sukuk programmes amounting to RM100 million.

Hong Leong Investment Bank Bhd Research (HLIB Research) has maintained its “buy” call on TNB with an unchanged target price of RM17 after the utility announced a record dividend for shareholders.

It said yesterday the declared final dividend of 44 sen per share that brought the total dividend for the financial year 2017 (FY17) to 61 sen per share, was in line with expectation of 60 sen per share, but above the consensus 50.8 sen per share.

According to a Bernama report, TNB management expected the dividend quantum to be sustainable given the expected stable earnings.

“TNB’s earnings and cash flow are expected to be stable due to the implementation of the incentive based regulation (IBR)/fuel cost past through (FCPT) mechanisms.

“The expected IBR revision to lower return on regulated assets by next year would be offset by new contributions from joint ventures, associates and power plants,” said the investment bank.

MIDF Research also reaffirmed the “buy” call on TNB with the target price of RM16.80.

The research house said TNB’s FY17 earnings of RM7.7 billion was within its and consensus estimates, accounting for between 102 and 104 per cent of forecast, respectively.

TNB doubled its dividend payout, which was at the high end of its current dividend policy (30 to -50 per cent) and also announced a further increase of its ceiling payout ratio to 60 per cent going forward, saying, this was riding on a strong macro backdrop.

TNB shares ended at RM14.96 on Bursa Malaysia yesterday.