OSK Research Maintains ‘Buy’ Call On TNB

Posted on March 24, 2011. Filed under: Energy |

(Bernama) — Tenaga Nasional Bhd is still a “Buy” despite negative news generated from the calamities in Japan and a higher-than-expected long-term coal prices.

OSK Research, in a research note, Wednesday said the disaster in Japan has turned negative public opinion towards nuclear power plants in Malaysia.

“We believe the news flows on this would be quiet for awhile. Meanwhile, there will be more emphasis on renewable energy,” it said.

However, it said the possibility of the Renewable Energy Act being passed in the current Parliament sitting was highly unlikely until after the general election.

The implementation of the Act would allow TNB an overall one per cent hike in Feed-in Tariffs.

The research house was also uncertain of the outlook for coal prices as damage to coal handling ports in North East Japan was limiting imports.

“It could lead to a 10 per cent drop in local imports over the next six month, but over the longer-term, a re-evaluation of nuclear power could lead to higher coal demand,” it said.

The research house maintained a “Buy” call on the power giant with a reduced fair value of RM7.54.

“While we keep our financial year 2011 coal price forecast unchanged, the potential longer term coal demand leads us to tweak up coal prices to US$112 per tonne, cutting our profit forecast by seven per cent as well as our fair value,” it added.



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