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



MIDF Research has retained its fourth quarter earnings forecast for Tenaga Nasional Bhd (TNB) as rising coal prices could weigh down the company's result.

"We are maintaining our financial year 2010 number for time being. We are wary of the impact from the rising cost of coal with potential margin compression in the fourth quarter 2010," it said in its research note today.

It added that expectation on this year's average coal price has increased to US$95 for 2010. The cost of coal has risen since December 2009, pushing Tenaga's average coal price to US$92 per tonne, as compared to US$82 per tonne in the first half this year.

As such, gross margin suffered, declining to 23.3 percent in the third quarter 2010 from 32.1 percent in the second quarter.
MIDF has also maintained a "buy" call on Tenaga Nasional Bhd with its target price remaining unchanged at RM10.35. -- Bernama