TENAGA: Poised to resume its uptrend?

KingKKK

Publish date: Wed, 09 Oct 2024, 09:17 AM

Overall Technical Verdict:

Considering the bullish long-term outlook but the recent short-term corrections, I think that TENAGA is poised to rebound. The stock has been performing well over the longer term. RM14.28 (which is the Moving Average 50) is the key to watch and if this level is broken, then the uptrend is likely to resume.

What are the themes for TENAGA?

Energy Transition: TENAGA's shift toward renewable energy aligns with global sustainability trends, with plans to reduce reliance on coal and expand solar, hydro, and other green energy projects.
Regulatory Environment: TENAGA operates in a heavily regulated market. Changes in tariffs, government energy policies, or subsidies could impact revenue and profitability.
Economic Growth: As Malaysia's largest utility, TENAGA's performance is tied to the country's economic health. Strong industrial and infrastructure growth boosts electricity demand, benefiting the company.
Dividend Stability: TENAGA has a history of stable dividends, attracting income-focused investors. Its ability to maintain payouts depends on consistent cash flow and profitability.
ESG and Carbon Neutrality: Environmental, Social, and Governance (ESG) concerns are rising. TENAGA's commitment to carbon neutrality by 2050 and improving sustainability metrics can influence investor sentiment and long-term growth potential.

Company background:

Tenaga Nasional Berhad (TNB) is Malaysia's largest electricity utility company, generating, transmitting, and distributing electricity to residential, industrial, and commercial sectors. It operates both conventional and renewable energy plants, playing a key role in the nation’s energy infrastructure development.

Details of the Technical Analysis:

Trend (Bollinger Bands & Moving Averages):

- Bollinger Bands show a compression in certain periods, indicating low volatility, followed by breakouts into a trending pattern. Recently, the stock has crossed the middle of the Bollinger Band, and it seems to be entering a potential consolidation or retracement phase.
- Moving Averages:
  - The 50-day MA (10.22) is well above the 150-day MA (9.93), which is a bullish long-term signal.
  - However, the price recently dipped below the 50-day MA, potentially signaling a short-term pullback. The long-term uptrend looks intact, but the stock needs to hold above its 150-day MA to maintain the bullish sentiment.
Volume:
- Volume spikes coincide with breakouts or significant price movement. The recent volume surge suggests potential institutional activity, but the declining price alongside high volume may indicate some selling pressure.
MACD and RSI:
- The MACD line crossed below the signal line, suggesting short-term bearish momentum. This indicates the stock is in a possible corrective phase after a rally.
- The RSI is currently at 41 which is a neutral level.
General Observation:
- The stock had a strong uptrend for several months, with higher highs and higher lows. However, the recent correction phase is evident in the technicals (MACD crossover, dip below 50-day MA, nearing overbought RSI), and this might indicate some sideways action or a pullback.
- The trend is still healthy on a longer-term view, but the recent dip warrants caution for short-term traders.