Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: ECMLIBRA



ECM Libra Investment Research has maintained a "buy" call for Tenaga Nasional Bhd (TNB) shares with an upward target price of RM10.10 from RM9.90 previously.

"Our target price is reinforced as it implies a decent 23 per cent discount to end-financial year 2011 discounted cash flow-based target price of RM13.08," it said in a research note today.

According to ECM Libra, the recent pullback in TNB share price gives investors the opportunity to accumulate TNB shares.

The research house has revised TNB's 2011 and 2012 financial year unit demand growth assumption higher from three to four per cent, due to the average coal price assumption in ringgit remaining relatively stable at slightly under RM300 per metric tonne.

"We also understand that the slower July 2010 unit demand growth of six per cent year-on-year was due to lower steel smelting activities but are not overtly concerned as we believe that the steel sector is at the cusp of an upcycle driven by building projects in the United States and capacity cuts in China," it said.

ECM Libra expect that TNB's financial year 2010 core net profit to come in within expectations at RM2.6 billion to RM2.7 billion.

"TNB will also record financial year 2010 forex gains of RM600 million to RM700 million," it said. - BERNAMA