Racing to power up the nation

TNB will gain more from competitive pricing under new supply agreements; efficient IPPS will win in open tender system. Buy TNB for stronger earnings ahead and Petgas for growing gas demand and a visible growth pipeline in new regas and power plants. Hold YTLP for 4% yield and longer term upside from new acquisitions and power plant.

Tenaga Nasional; Buy; RM5.99
Price target: RM7.00; TNB MK
Better earnings visibility

Turned in core profit after gas supply improved. RM2bn compensation will be booked in 2Q; TNB will continue to claim if gas supply is below 1,350mmscfd. Maintain Buy and RM7.00 TP for strong earnings recovery in FY12.

Petronas Gas; Buy; RM16.20
Price target: RM16.90; PTG MK
Ascending to new heights

Gas shortage creates opportunities for Petgas. Ample catalysts from Petronas' rising gas capex and development of new regas plants. Resilient domestic earnings with visible growth pipeline; maintain Buy with higher RM16.90 TP.

YTL Power; Hold; RM1.84
Price target: RM2.20; YTLP MK
Marubeni partnership could lead to more global ventures

New power plant in Malaysia and future acquisitions are longer term catalysts. YES is a drag in near term earnings growth. Hold for reasonable valuations and 4% net yield; RM2.20 TP is derived from SOP valuation.

Source: HwangDBS Equity Research 8 Feb 2012