Tenaga Nasional’s (TNB) 4QFY21 headline net profit came in at RM877.8m ( -27.6% YoY, -16.3% YoY) which was within our and consensus estimates. Cumulative FY21 core net profit of RM4,722.1m (+23.4% YoY) constitutes 102% and 98% of our and consensus full year estimates respectively. Group revenue rose 19.7% YoY due to Imbalanced Cost Pass-Through (ICPT) under-recovery and higher sales of electricity. Normalised EBIDTA increased by 11% YoY due to higher sales of electricity, higher contribution from goods and services and higher share of profit from associates. Gearing remains healthy at 47%. No change to our earnings estimates. Our Outperform call is retained with an unchanged DCF-derived TP of RM12.42.
- FY21 revenue up 19.7% YoY to RM52,629.5m mainly due to ICPT under-recovery and higher sales of electricity. However, headline operating income is lower YoY in FY21, as FY20 was lifted by income for deemed disposal of associate amounting to RM234.4m. In FY21, EBITDA margin was lower mainly due to higher allowance of doubtful debt (ADD) and impairment made for GMR Energy Limited (GMR). Higher share of result of associates was contributed mainly by Jimah Energy Venture.
- Regulatory Period 3. To recap, RP3 which was approved for the period from Feb 1, 2022 to Dec 31, 2024 back in January is said to have received the approval for the allowed Operating Expenditure (OPEX) and Capital Expenditure (CAPEX) of RM17.96bn and RM20.55bn respectively with regulatory return remaining the same as RP2 (WACC of 7.3%). It was reported earlier that TNB proposed a CAPEX allocation of RM24bn for RP3. While CAPEX allocation came in short, regulatory return approved was better than expected. Elsewhere, base coal price and gas price approved for RP3 period are USD79/MT and RM26/MMBtu respectively based on 2-tier gas pricing.
Source: PublicInvest Research - 25 Feb 2022