Tenaga Nasional Bhd’s (TENAGA) 3QFY23 results came in within ours but below consensus expectations. 9MFY23 core net profit of RM2.6bn (-22.7% YoY) accounted for 74% of ours and 64% of consensus full-year forecasts.
QoQ: 3QFY23 revenue grew 1.1% QoQ, driven by a 0.9% increase in electricity demand. PBT surged 94.9% QoQ on the back of improvement in fuel margins as coal price stabilised, a net foreign exchange gain of RM4.6mn compared with a loss of RM391.7mn in the preceding quarter as Ringgit strengthened against the Japanese Yen and British Pound, as well as writeback of doubtful debt allowance following the improvement in collection. Notably, Genco registered a widened LAT of RM134.1mn compared with LAT of RM116.7mn in the preceding quarter, which we believe could be due to higher operating expenses, particularly from repair and maintenance activities.
YoY: 3QFY23 revenue advanced 3.9% YoY, supported by 3.6% growth in electricity demand. PBT plunged 31.2% YoY due to negative fuel margin impacting Genco despite finance income more than doubling and net foreign exchange gain of RM4.6mn (3QFY22: loss of RM400.7mn).
YTD: 9MFY23 revenue increased 3.9% YoY on the back of a 2.5% increase in electricity demand. PBT for the period dipped 40.4% YoY due to higher finance cost (+5.5% YoY) and a negative fuel margin of RM767.9mn compared with a positive fuel margin of RM916.7mn in 9MFY22.
Impact
No change to our earnings forecasts.
Outlook
Early this month, TENAGA received RM2.35bn of ICPT cost recovery for July to September 2023 from the government. The continuous recovery of ICPT has helped to reduce the group’s receivables from RM22.8bn as of FY22 to RM13.4bn as of 3QFY23, hence improving its operating cash flow.
Following the stabilisation of coal prices, we expect Genco’s profitability to improve as the negative fuel margin continues to ease in the coming quarter. Nonetheless, Genco will likely turn into the black only in FY24, provided the coal price remains stable.
TENAGA is the prime beneficiary of the National Energy Transition Roadmap (NETR), as the group will benefit from incremental revenue via wheeling charges of cross-border electricity exports. The NETR still lacks the finishing touch of finalising the mechanism of the exchange hub to enable the export of renewable energy.
Valuation
Reiterate Buy with an unchanged TP of RM11.00/share based on DCF valuation (k: 7.2%, g: 1.4%).
Be the first to like this. Showing 0 of 0 comments
Post a Comment
People who like this
Featured Posts
MQ Trader
Introducing MY's First IPO Fund for Sophisticated Investors!
MQ Chat
New Update. Discover investment communities that resonate with your ideas
MQ Trader
M & A Value Partners IPO Equity Fund has been launched - Targeted 13% Return p.a
Latest Videos
0:17
New IPO: Building management systems (BMS), solar thermal systems and energy-saving services provider, Solar District Cooling Bhd aims to list on the Ace Market!
MQ Trader 252 views | 1 d ago
0:17
New IPO: The onshore and offshore support services provider for the O&G industry, Steel Hawk Bhd aims to list on the Ace Market!
MQ Trader 11338 views | 9 d ago
0:17
New IPO: The largest mini-market player and a leading groceries retailer in Malaysia, 99 Speed Mart Retail Holdings Bhd aims to list on the Main Market!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....