KUALA LUMPUR, July 28 (Bernama) -- Hong Leong Investment Bank (HLIB) has maintained its "buy" call on Tenaga Nasional Bhd (TNB) with an unchanged target price of RM17.00, following its RM2.3 billion core earnings reported for the third quarter ended May 31 2017 (Q317) and RM6.4 billion for the first half of the year.
HLIB said TNB's core earnings hit 75.7 per cent of the research house's estimate for TNB´s financial year 2017.
"Electricity demand normalised in Q217 and the management expects growth to be at between 4.3 to 4.8 per cent this year," HLIB said in a research note today.
Furthermore, the imbalance cost pass remained intact as TNB's under recovery cost of RM507.1 million in Q317 would be compensated by the government through the Power Purchase Agreement savings fund.
"We remain positive on TNB´s prospects and maintain a 'buy' call with an unchanged target of RM17.00," said HLIB.
Meanwhile, AllianceDBS Research also maintained its "buy" call on the national electric utility company, with a higher target price of RM16.00 from RM15.80 previously.
"We have revised our target price after incorporating our earnings revision and are rolling forward our valuation base to FY18," it said.
It also noted that TNB was trading at an undemanding valuation despite improved earnings visibility arising from the incentive-based regulatory framework.
In a filing to Bursa Malaysia yesterday, TNB said its pre-tax profit for Q317 eased slightly to RM2.43 billion from RM2.53 billion in the same period last year.
Revenue rose to RM12.54 billion from RM12.12 billion.
TNB´s share price, at 10.49 am today, was down four sen to RM14.20 with 1.43 million shares changing hands.