(TNB MK/BUY/RM13.76/Target: RM16.00)

The stock has underperformed the KLCI by 7% ytd as the defensive utilities sector is being passed over, given the risk-on environment. Trading at 10x forward earnings, we like the stock for its attractive valuations and above-market yield of 5%. TNB’s management continues to stand pat alongside the effectiveness of the ICPT – which will see the government raising tariff by 4% or dipping into IPP savings in the upcoming Jul 17 ICTP review. Maintain BUY. Target price: RM16.00.

Source: UOB Kay Hian Research - 7 Apr 2017