Tuesday, April 10, 2012

Tenaga ... Apr12

Its prospects will be attributed to a recovery in gas supplies from offshore Terengganu, expectations of an upcoming general election and power purchase agreements (PPA) renegotiations between the Energy Commission and first generation independent power producers (IPP).

This is assuming the first generation IPPs will have to compete with new generation capacity and among themselves to secure an extension to the first generation PPAs, up to 2,500MW of first generation PPAs potentially renegotiated and an indicative 20% reduction in the capacity payments to these renegotiated PPAs effective immediately.

Coal prices, especially Australian coal prices, have been on the retreat since September 2011 due to the improved weather in Australia thus allowing coal to be mined, transported and exported; warmer weather post the Northern Hemisphere winter season; and indications of a general economic slowdown in China. In addition, the increased supply of natural gas in the United States from shale has led to the reduced demand for coal.

These changes in our assumptions have led to a rise in its net profit for FY12 - FY14.

In the shorter term, uncertainties over the election timing may cap TNB’s share price, although the improved q-o-q results in the upcoming 2QFY12 results announcement (mid-April 2012) should also boost sentiment as gas supply normalises somewhat.

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