Tenaga at Six-Year High Sends KLCI to Record: Kuala Lumpur Mover

Tenaga Nasional Bhd. (TNB), Malaysia’s biggest power producer, rose to a six-year high in Kuala Lumpur trading after third-quarter profit more than doubled, pushing the Southeast Asian nation’s benchmark stock index to a record.

The stock jumped 3.2 percent to 9.30 ringgit, the highest close since June 2007. It was the biggest gainer in the FTSE Bursa Malaysia KLCI Index, which added 0.4 percent. Net income in the three months ended May surged 154 percent from a year earlier to 1.71 billion ringgit ($536 million), Tenaga said in a statement yesterday.

CIMB Holdings Bhd. and RHB Capital Bhd. raised their price targets as Tenaga’s nine-month net income beat estimates. Profit was boosted by electricity sales, lower coal costs, foreign exchange gains and a 592 million ringgit increase booked on compensation from the government and state oil company Petroliam Nasional Bhd. for disruptions in fuel supply to its power plants.

“The pieces are falling into place,” Yeoh Yung Juen, an analyst at CIMB, wrote in a report. “Tariff reforms, stable demand and higher gas supply are catalysts” for Tenaga, he said.

The prospect of Tenaga being allowed to increase electricity tariffs is “likely” given state subsidies may be reduced, Chairman Leo Moggie told reporters yesterday in Kuala Lumpur, where the company is based.

State Subsidies

Prime Minister Najib Razak’s government temporarily froze cuts in state subsidies on essential items ahead of Malaysia’s May 5 general election, when the ruling coalition was returned to power. It last allowed Tenaga to raise electricity charges to help pass on costs in 2011, the first time in almost three years.

Tenaga was the most actively traded stock on the KLCI today with 28 million shares changing hands, three times its three-month daily average, according to data compiled by Bloomberg. The benchmark gauge has gained 6.4 percent this year.

CIMB increased its price target to 10.96 ringgit from 10.20 ringgit and maintained its outperform rating, according to a report by analyst Yeoh. AMMB Holdings Bhd. raised its price forecast to 10.45 ringgit, while RHB increased its fair value to 10.58 ringgit, according to separate reports from the two banks.

To contact the reporter on this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net.

To contact the editor responsible for this story: Michael Patterson in Hong Kong at mpatterson10@bloomberg.net

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