PETALING JAYA: National electricity firm Tenaga Nasional Bhd (TNB) made a net profit of RM1.73bil, or 30.74 sen per share, for its first quarter to Nov 30, 22% higher than the net profit of RM1.42bil, or 25.71 sen per share, for the same period a year ago, helped by lower taxes.
The lower effective tax rate was mainly due to the recognition of prior years’ reinvestment allowance incentive, as well as a one-off impact from the reversal of deferred tax provision to reflect the reduction of the corporate income tax rate from 25% to 24% as announced in Budget 2014, it said in a statement.
Revenue for the period stood at RM9.59bil against RM9.13bil.
A senior analyst who covers TNB said its results came in above expectations.
“With the implementation of the Incentive-based Regulation (IBR), it is anticipated that the fuel cost risks are mitigated, therefore leading to better earnings predictability for TNB,” the utility firm said on its prospects.
In a note to clients before the release of the results, Maybank IB Research said it was bullish on TNB, as it believes that consensus had yet to incorporate the full earnings accretion from the recent tariff hike, and that the reduced earnings risk under the IBR had not been fully priced in.
Electricity tariffs were raised by between 14.9% and 16.9% effective Jan 1.
Introduced by the Energy Commission about two years ago, the IBR framework had recently seen its pilot implementation.
TNB president and chief executive officer Datuk Seri Azman Mohd said the pilot implementation would drive cost efficiency and enhance transparency in the operational, financial and technical performance aspects of the company.
Electricity tariffs are supposed to be revised under the IBR every six months for fuel-cost pass through, and every three years for base-line tariff hikes to reflect TNB’s cost inflation such as staff cost and general expenses, according to a note by UOBKayHian.
For the quarter under review, TNB reported a lower operating profit of RM1.52bil compared to RM1.76bil previously, a decline of 13.4%, partly attributed to higher generation costs from burning the more expensive liquefied natural gas, and when necessary, oil and distillate, it said in the statement.
In addition, TNB’s share of these expensive fuel costs has increased from 33% to 50%, resulting in a lower earnings before interest, taxes, depreciation and amortisation margin of 28% compared to 31% in the last corresponding period, it stated.
Electricity demand growth in Peninsular Malaysia for the quarter under review had “slightly moderated” due to festive seasons.
However, this is expected to improve in the coming quarters in line with the improved gross domestic product forecast for 2014, it added.
Shares of TNB were traded lower ahead of its results announcement yesterday, finishing the day two sen lower to RM11.50 in an overall weak market.
The lower effective tax rate was mainly due to the recognition of prior years’ reinvestment allowance incentive, as well as a one-off impact from the reversal of deferred tax provision to reflect the reduction of the corporate income tax rate from 25% to 24% as announced in Budget 2014, it said in a statement.
Revenue for the period stood at RM9.59bil against RM9.13bil.
A senior analyst who covers TNB said its results came in above expectations.
“With the implementation of the Incentive-based Regulation (IBR), it is anticipated that the fuel cost risks are mitigated, therefore leading to better earnings predictability for TNB,” the utility firm said on its prospects.
In a note to clients before the release of the results, Maybank IB Research said it was bullish on TNB, as it believes that consensus had yet to incorporate the full earnings accretion from the recent tariff hike, and that the reduced earnings risk under the IBR had not been fully priced in.
Electricity tariffs were raised by between 14.9% and 16.9% effective Jan 1.
Introduced by the Energy Commission about two years ago, the IBR framework had recently seen its pilot implementation.
TNB president and chief executive officer Datuk Seri Azman Mohd said the pilot implementation would drive cost efficiency and enhance transparency in the operational, financial and technical performance aspects of the company.
Electricity tariffs are supposed to be revised under the IBR every six months for fuel-cost pass through, and every three years for base-line tariff hikes to reflect TNB’s cost inflation such as staff cost and general expenses, according to a note by UOBKayHian.
For the quarter under review, TNB reported a lower operating profit of RM1.52bil compared to RM1.76bil previously, a decline of 13.4%, partly attributed to higher generation costs from burning the more expensive liquefied natural gas, and when necessary, oil and distillate, it said in the statement.
In addition, TNB’s share of these expensive fuel costs has increased from 33% to 50%, resulting in a lower earnings before interest, taxes, depreciation and amortisation margin of 28% compared to 31% in the last corresponding period, it stated.
Electricity demand growth in Peninsular Malaysia for the quarter under review had “slightly moderated” due to festive seasons.
However, this is expected to improve in the coming quarters in line with the improved gross domestic product forecast for 2014, it added.
Shares of TNB were traded lower ahead of its results announcement yesterday, finishing the day two sen lower to RM11.50 in an overall weak market.
