Saturday, September 24, 2011

Gas shortage, fuel cost affecting rating performance of TNB

PETALING JAYA: Gas supply shortage and high fuel cost are affecting Tenaga Nasional Bhd's (TNB) rating performance, with analysts dowgrading the stock on concern that solutions are nowhere to be seen.

TNB closed at RM5.02 yesterday, up two sen, with 3.98 million shares changing hands.

ECM Libra Investment Research, in its downgrade of TNB to “hold”, noted heightened risks as a result of the prolonged gas curtailment.

This was following a news report that TNB had bought 105,000 tonnes of fuel for October delivery and expected to continue purchasing steady volumes until next year.

ECM Libra said the news signalled that the much-awaited gas recovery at the Bekok C field, offshore Terengganu, had been delayed again.

"The previous timeline for Bekok C gas to be back online was by end-September. With this latest purchase of oil delivery in October, it looks very likely that the gas recovery has yet again been delayed,” it said.

TNB had estimated that for every 100 million standard cu ft per day of gas shortage that was met by burning oil and distillates (which was six times more expensive), the negative impact to the bottom line was about RM7mil to RM7.5mil a day.

Chief executive officer Datuk Seri Che Khalib Mohd Noh was quoted in the media as saying that TNB was incurring an additional RM400mil a month in fuel cost to replace the gas shortfall.

“On a separate note, the utility giant has realised its 11-month electricity sales figures, which showed a year-on-year unit demand growth of 3%.

“This is within our full-year estimate of 2.2%. August's demand is expected to be weak due to the Hari Raya festive season,” ECM Libra said.

The brokerage has pegged the utility's financial year 2012 (FY12) earnings per share estimate to a lower price/earnings multiple of 12.8 times, which was a 15% discount to the five-year average of 15 times.

“We currently do not have good visibility as to when the gas shortage issue will be solved. The many delays in getting back gas supply from Bekok C field have been disappointing,” it said.

“Right now, nobody knows for sure when the Bekok C gas field will be back online or whether Petroliam Nasional Bhd's gas fields will have further unplanned maintenance shutdowns.”

Meanwhile, on Thursday, Kenanga Research downgraded TNB to “underweight” from “neutral” as the utility company faced longer-than-expected gas supply curtailments.

This was largely due to the delay in the Bekok gas line, resulting in higher usage of medium fuel oil and diesel fuels which, based on per unit cost, is six times higher than that of gas, it said.

No comments:

Post a Comment