Tenaga

Uncertainty Shrouding TNB

'''' TNB's continued to face gloomy outlooks with prolonged Petronas gas curtailment, leading to short-supply of gas.

'''' TNB had to continue rely on distillate and oil (cost 5-6x more than gas) to make up the shortfall in power supply. TNB's CEO, Dato Che Khalib quoted TNB incurring extra RM3bn for this year due to gas shortage.

'''' Additional gas allocation of 200mmscfd will only start by July 2012 (End FY8/12) when Melaka regasification plant commences operation. Even then, the additional gas supply will only suffice for FY13.

'''' For FY14-16, TNB may again face with potential higher fuel costs, when gas power plants utilization is expected to hit capacity as well. New coal power plant (Janamanjung) will only commence earliest by March 2015 (Mid FY8/16).

'''' Furthermore, TNB faced increasing energy costs i.e. gas coal, oil and distillate prices.

'''' The implementation of Fuel Cost Pass Through mechanism had at least given some lights to TNB, but decision making still lies on government.

'''' The proposal for fuel cost (during gas curtailment period) sharing between TNB (40%), Petronas (30%) and IPPs (30%), is still pending for government's approval.

'''' Downgrade to Hold with target price of RM5.10 due to limited upside catalyst, but downside protected by low P/B valuation.

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FBM KLCI - Potential technical rebound

'''' The FBM KLCI is expected to stage a mild technical rebound in the early part of this week, playing catch up with the strong regional bourses gains on 16 Sep. Sentiment will also be boosted by PM's proposed repeal of the ISA and anticipation of a people-friendly Budget 2012 (tabled on Oct 7), prior to the 13^th general election.'' However, any rebound is likely to be short-lived (unless it breaches the 10- and 20-d SMAs) as the KLCI continues to trend below the 10, 20, 30, 50, 100 and 200-day daily SMAs.

DJIA: Uptrend likely to continue''

'''' This week, investors will focus on the FOMC meeting (20-21 Sep) and the IMF/World bank semiannual meeting (20-24 Sep) as well as major economic releases e.g. Aug housing starts (20 Sep) and Aug leading indicators (22 Sep) reports. Technically, near term Dow's outlook has turned bullish following last week 4.7% surge. Immediate supports are 10824-11000 whilst strong resistance zones are at 11709-12000.