MIDF Amanah Investment Bank Bhd projects Tenaga Nasional Bhd's (TNB) net income for the financial year ended 31 December 2021 to increase 22% year-on-year, driven mainly by the absence of several ‘one-off’ factors experienced by the company in the previous financial year.
In a statement issued today, the firm explained that the 'one-off' factors included disruptions at the power plant, retail losses and National Caring Assistance (BPN) discounts which collectively amounted to about RM670 million.
"While waiting for the results of the three-year (2022-2024) regulatory period parameters, for now, we conservatively assume marginal growth for the projected net income for the financial year 2022," he said as reported by Bernama
MIDF also reaffirmed a 'buy' recommendation on TNB shares at a target price driven by an unchanged discounted cash flow of RM11.80 per share.
The firm added that the price had taken into account the 10% discount of Environmental, Social and Corporate Governance elements to reflect the valuation pressure on TNB, given its high exposure of its generating units to coal -fired power plants.
Meanwhile, Public Investment Bank Bhd revised up TNB's net income forecast for financial year 2021 to 11% on the assumption that better margins were driven by lower generation costs.
Through its research note, the investment bank maintained an ‘outperform’ recommendation on TNB shares with a target price driven by unchanged discounted cash flow at RM12.42.
