KUALA LUMPUR: Research firms have cut Tenaga Nasional Bhd's (TNB) earnings forecast after its financial result in the third quarter of financial year 2024 (Q3 FY24) misses expectations.
RHB Investment Bank Bhd (RHB Research), in a note, said at just 65 per cent and 66 per cent its own and street FY24 estimates, TNB's core earnings of RM2.7 billion in the first nine months missed expectations due to higher-than-expected expenses.
The firm cut its FY24-26 earnings estimates by 6.0 per cent, 4.0 per cent and 4.0 per cent after imputing higher operating expenditure.
It also lower the target price to RM16.60 from RM16.70 while maintaining the "buy" call on TNB.
On a positive note, RHB Research sees TNB as a proxy to Malaysia's energy transition growth journey under the National Energy Transition Roadmap (NETR).
"It should also continue benefiting from the continuous upgrade in transmission and distribution assets, where the demand for energy can be anchored by mushrooming data centre (DC) developments," it said.
Pending the outcome of Regulatory Period (RP) 4, which is expected to be known by the end of 2024, the firm said some restructuring of tariffs may occur to account for new initiatives, such as energy exports and the collection of wheeling charges under the third-party access (TPA) mechanism.
"We estimate average regulated capex to increase by 25 to 40 per cent versus RP2 levels, to RM8.6 to 9.6 billion yearly, with higher annual demand growth of 3.0 to 4.0 per cent and an unchanged weighted average cost of capital of 7.3 per cent.
"Based on our sensitivity analysis, we see regulatory net returns rising by 1.34 per cent for every RM1 billion increase in average capex annually," it said.
MIDF Research slashed TNB's FY24 earnings estimates by 12 per cent to RM3.77 billion but maintained FY25 projections.