Period 4Q12 /
FY12
Actual vs. Expectations
FY12 core earnings of
RM3.35b was above street but within our expectations, being 19% and 5% ahead of
street’s and ours, respectively, on the back of better fuel cost dynamics. Note
our core earnings exclude one-offs and include compensations (refer to
notes).
Dividends 4Q12
NDPS of 15.0sen, implying FY12 NDPS of 20.0sen (2.4% yield) vs. our 22.0sen
estimates.
Key Results Highlights
YoY, FY12 core
earnings rose 48% on higher unit demand (+4.3%) and EBITDA margins improved to
25.2% (+1.9ppt). Gas supply was better at 929-988mmscfd (FY11: 900-994mmsfd).
Higher coal usage (+10% to 20.8m MT) at lower coal prices (-1% to RM322/MT or USD104/MT)
helped to contain cost per unit. So that generation from expensive MFO/diesel
was lower at 4.8% from FY11’s 5.1%. Furthermore, fuel compensations mean higher
unit demand is met by more normalized fuel cost.
QoQ, 4Q12 core
earnings of RM1.21b was up 15% after excluding one-off provisions of RM160m due
to Irham Niaga legal suit. Besides the above, other operating income also
improved to the black of RM151m (3Q12: -RM261m) whilst interest income grew to
RM87m (3Q12: RM1m).
Outlook Tenaga’s FY13E guidance; 1) Peninsula demand growth
of 4%-5% (ours: 4.2%); 2) coal cost of <USD100/mT (ours: USD97/mT). It also
appears gas supply will hover at 950-1100mmscfd until Melaka RGT is
online.
Melaka RGT gas supply
at market prices will likely commence in early CY13. However, Tenaga maintains
NEUTRAL earnings impact given strong government support and its CAPEX
obligations (refer overleaf).
Change to Forecasts
No material changes
to FY13E core earnings of RM3.37b (+2%) (refer overleaf).
Rating Maintain OUTPERFORM
Limited downside risk
with the government’s assurance that fuel-cost compensations will continue
until PEMANDU’s subsidy rationalization plan is in place. Catalyst will be next
year’s tariff review, which hinges on GE timing.
Valuation Slightly higher TP of RM8.05 (RM7.90
previously) based on unchanged 13x Fwd PER and slightly higher FY13E core
EPS.
Risks Risks
lie with government’s ability to continue compensation (or via a stabilization
fund) before fuel-cost-pass-through tariff kicks-in.
Source: Kenanga
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