• Maintain BUY (TP: RM17.84). Tenaga 9MFY24 PATAMI of RM3.74bn was inline with our estimate however slightly above consensus at 85% and 92% respectively. In 3QFY24, PATAMI jumped 76% YoY to RM1.6bn attributed to higher sales of electricity (+6% YoY), lower fuel cost and higher forex translation gain (+>100% YoY) amid strengthening of MYR. No dividend declared and earnings revision made. We expect 4Q24 earnings to be slightly impacted by the reversal of MYR, leading to lower forex translation gains. However, we maintain a positive long-term outlook, with stable fuel cost, growing electricity demand and opportunities from regulated asset base (RAB) expansion. Reiterate a BUY call on Tenaga with TP of RM17.84 based on FY25F EPS of 82sen pegged to PER of 21.8x, a 33% premium to 2 years historical mean. We think this is fair premised on reforms of the power sector market onwards.

• Key Highlights. Overall, higher electricity sold YoY were recorded across all segment with industrial, commercial, domestic grew at 3%, 8% and 7% respectively. Noted that commercial segment comprised of retails, data centres and business services. Briefly, 9MFY24 still record a negative fuel margin though it was smaller at RM92mn (vs 9MFY23:RM767mn) amid normalisation of coal prices.

• Earnings Revision. No changes in revision.

• Outlook. We foresee Tenaga’s earnings in 4QFY24 to slightly be impacted by the reversal of MYR, resulting in lower forex translation gain. In the long term, we expect its earnings to remain robust with stable fuel prices, stronger electricity demand from energy-guzzling Data Centres (DCs) project and CRESS as well as opportunity through expansion of regulated asset base (RAB) from the need of grid upgrade

Source: BIMB Securities Research - 29 Nov 2024