Latest news with #RM19.10
The Star
24-06-2025
- Business
- The Star
New electricity tariff earnings-neutral for TNB
PETALING JAYA: The new electricity tariff schedule to be implemented from next month, which is a tariff regime change after 11 years, will be earnings-neutral for Tenaga Nasional Bhd (TNB), say analysts. The new monthly fuel cost pass-through will improve the utility giant's cash flows by reducing timing mismatches and receivables risk, they said. Last Friday, the Energy Commission (EC) announced a new electricity tariff structure, replacing the tariff regime schedule introduced in January 2014. The new framework introduces changes across three key areas, one being a lower base tariff of 45.40 sen per kilowatt-hour (kWh) under the regulatory period four (RP4), down from 45.62 sen/kWh approved in December 2024. The second change involves revised user categories which is split into domestic and non-domestic, based on voltage usage (low, medium and high). Previously, non-domestic users were classified by business segments such as commercial, industrial and timing. A new tariff category for ultra-high voltage users has also been introduced with rates of up to RM1 per kWh. The third change is the revamped fuel cost pass-through mechanism with the new Automatic Fuel Adjustment (AFA) replacing the current Imbalance Cost Pass-Through (ICPT). Notably, the AFA mechanism allows for monthly reviews instead of the previous half-yearly adjustments. CGS International (CGSI) Research said the reforms are driven by the need to ensure a more cost-reflective supply, promote greater transparency and energy efficiency and keep pace with evolving industry dynamics. The revised tariff takes effect from July 1 to Dec 31, 2027, during RP4 under the incentive-based regulation (IBR) framework. 'Overall, the revised tariff schedule is earnings-neutral for TNB, as the IBR framework largely insulates the company from demand and price risks. However, the shift to monthly fuel cost pass-through is a clear positive for group cash flows as it reduces timing mismatches and receivables risk. 'This should consequently help ease working capital requirements and improve cash flow visibility, giving management greater flexibility in managing capital expenditure (capex) and dividend payouts in our view,' CGSI Research said in a report. The research house reiterated its 'add' rating on TNB with a RM19.10 target price, as the announcement had provided clarity and restored confidence in regulatory visibility due to the six-month delay in implementation. This had raised fears of a potential downward revision in allowed returns for the company. Amid the current uncertain global macro backdrop, CGSI Research said TNB's regulated earnings base would provide investors a buffer against market volatility. Shares of TNB gained eight sen to RM14.30 at the time of writing amid a cautious market due to heightened geopolitical tension. TA Research and Kenanga Research had target prices of RM17.30 and RM17.20, respectively. TA Research said although network charges under the RP4 base tariff is lower, it believes this is spread over a higher volume projection. In addition, the base tariff only reflects RP4 base capex, while recovery of contingent capex will be structured under a different mechanism. Overall, it estimates TNB's regulated revenue to increase by an average 23% over the RP4 period. TA Research said the group's management is confident of achieving at least 60% to 70% of RP4 contingent capex to cater for the energy transition and demand growth from the mushrooming of data centres. The research house said the stock is currently cheaper than usual, trading at 5.8 times its expected 2025 earnings, compared to its historical average of 7.2 times. Meanwhile, Kenanga Research noted that electricity demand from data centre investment of over 5,000MW by 2035 is equivalent to 20% of total generating capacity in Malaysia. 'In the near term, a total of 700MW data centre is slated to come onstream by this year. This should continue to drive demand growth higher, thus improving operation efficiency and boosting TNB's non-regulated earnings,' it said.
The Star
29-04-2025
- Business
- The Star
FBM KLCI holds on to recent gains amid return of foreign interest
KUALA LUMPUR: Investors on Bursa Malaysia are taking time to digest recent gains as Wall Street ended mixed overnight ahead of the release of quarterly results from Big Tech. On Malaysia's main index, blue chips took a breather below the 50-day simple moving average after four consecutive days of gains with foreign funds returning to the oversold market after a protracted selling streak. The FBM KLCI stayed nearly flat against the previous day's closing level - opening just 0.61 points lower at 1,520.98 to hold steady at four-week highs. According to Rakuten Trade, it was surprised by the sudden U-turn by foreign funds, which prompted a net inflow of US$540mil into the domestic market over the last three sessions. "If such buying continues, we may see the index to hover between the 1,520-1,530 range today and surpass the crucial 1,530 mark anytime soon," it said in its review. In domestic sectors, Malacca Securities Research said cybersecurity stocks are getting their turn in the limelight after the rising incidents of cyber threats. "We remain positive on cybersecurity stocks like LGMS and Cloudpoint, as we believe market participants will realise the importance of cybersecurity as global digitalisation effort accelerates and we expect software related stocks to be less impacted by the reciprocal trade tariffs," it said in its review. It added that traders could focus on selected construction, O&G, technology, utility and glove stocks for the session, as well as WTEC, which is making its debut on the ACE Market today. WTEC, a foam products manufacturer, is one of the most actively traded stocks in early trade, but is receiving a lukewarm welcome. Opening flat at 25 sen apiece, the share was down 0.5 sen (2%) in the first 15 minutes of trading with seven million shares traded. Other shares seeing active trading action included NexG up one sen to 38 sen and Jiankun flat at three sen. On the FBM KLCI, Nestle jumped RM1.92 to RM82.30 following its results announcement yesterday, amid suggestions the consumer giant's prospects could be turning around. PETRONAS Dagangan gained 12 sen to RM19.10 while Hong Leong Bank slid 14 sen to RM19.86.
