TNB sparks Bursa’s rise to 3-month high
KUALA LUMPUR: The FTSE Bursa Malaysia KLCI hit a three-month high yesterday, mainly supported by key heavyweights including Tenaga Nasional Bhd (TNB), Press Metal Aluminium Holdings Bhd, Sime Darby Bhd, Petronas Chemicals Group Bhd and Petronas Gas Bhd.
The key index closed at 1,771.76 points, up 11.77 points from Tuesday’s close of 1,759.99.
Total volume was also higher, with 2.31 billion shares worth RM1.99 billion changing hands from Tuesday’s 2.07 billion shares.
TNB’s shares rose after the government made several announcements on Tuesday that were expected to benefit the national utility company.
The electricity tariff rates in Peninsular Malaysia will be maintained for the next three years, while the rates in Sabah and Labuan will remain unchanged until June next year.
The rates are 38.53 sen per kilowatt hour (sen/kWh) in Peninsular Malaysia and 34.52sen/kWh in Sabah and Labuan.
TNB said the government had agreed to fund RM929.37 million for the subsidy and rebate of 1.80sen/kWh from January 1 to June 30. This included a 0.28sen/kWh surcharge from additional cost of (electricity) generation and 1.52sen/kWh to continue the current Imbalance Cost Pass Through (ICPT) rebate for customers.
As at 11am yesterday, TNB shares rose 14 sen to RM15.12, with 700,800 shares changing hands. It ended the day’s trading at the same price but with higher trading volume of 10.33 million shares.
Hong Leong Investment Bank said TNB’s earnings and cash flow were expected to be stable due to the implementation of the incentive-based regulation (IBR) and ICPT mechanisms.
The expected IBR revision to lower return on regulated assets by next year would be offset by new contributions from associates and power plants, it said. Shareholders could also benefit from higher dividend payout.
MIDF Research said TNB remained its top sector pick, with a target price of RM16.80. Amir Hisyam Rasid