THE BUZZ
In a Bursa announcement, Tenaga Nasional (TNB) announced
that its Chief Financial Officer (CFO),
Mohamed Rafique Merican bin Mohd Wahiduddin Merican, 47, has resigned to
pursue better opportunities and career advancement.
OUR TAKE
A surprise. This
piece of news took us by surprise as we had not heard any rumours of En Rafique
leaving. Meanwhile, a corporate day being organized by TNB for investors in May
could be affected by this development. Appears to be an amicable parting of ways.
As far as we understand, there are no negative developments surrounding En
Rafique’s departure. We also understand that management has already
begun the search for a replacement.
During En Rafique’s tenure, TNB
continued to pare down its debts despite facing numerous headwinds. At this
juncture, we believe that there will be
minimal disruption to TNB’s activities given that all
standard operating procedures should
be in place at this
long established Government
Linked Company (GLC).
Coal tax conundrum. Sentiment in the company has been slightly doused of late in view of recent rumours that
Indonesia may be slapping a 25% export tax on coal, which stoked fears of a
price hike in coal. While we do see some rationale for an export tax on mining
ores, we see no justification for a coal export tax as there is limited
capacity for local upgrading of
coal or value adding in Indonesia prior
to export. We believe that various
parties, including miners and importers, will lobby hard to have this tax
reduced or postponed. For now, we maintain our coal cost assumption of USD110
per tonne for FY12 and FY13.
Maintain BUY.
While some parties may choose to read more than is justified in
the resignation of the CFO, particularly given the upcoming departure of CEO Datuk Seri Che
Khalib - who has chosen not to renew his
contract when it expires in June, we believe that a leading GLC like TNB will keep its
operations intact. As such, any short term share price weakness should be viewed
as an opportunity to accumulate the shares. We maintain our earnings forecast
and call, pending further clarification
from TNB’s upcoming results briefing on 12 April.
Source: OSK188
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