MIMB Investment Bank Bhd has upgraded its target price for Tenaga Nasional Bhd (TNB) shares on anticipation the stronger ringgit will help spur buying interest in view of the national utility company's sizeable US dollar-denominated borrowings.

It said TNB's share price had yesterday hit a new high of two-and-half years on the back of a firmer ringgit that clinched a new high of RM3.10 against the US Dollar since removal of the currency peg in July 2005.

"We reckon that a strong ringgit should boost TNB's bottom line. However, not its cashflow. As such, this will not change its core fundamentals," said MIMB in a research note today.

"Hence, in our view the re-rating is rather a sentiment play. We are rolling over our re-valuation base on calendar year 2011. Hence, our new price target is RM9.60 per share, based on the unchanged target price-to-earnings ratio of 12.5 times, from RM8.75 per share," said MIMB in a research note.