KUALA LUMPUR, Nov 29 — Tenaga Nasional Bhd’s (TNB) shares fell 4 per cent in early trade after the release of its third-quarter financial year 2024 (3Q FY2024) earnings, which came in below expectations.

A sluggish global stock market further compounded the decline, dampening demand for the counter.

At 9.45 am, the counter was 54 sen weaker at RM13.44 with 6.2 million shares traded.

Public Investment Bank said excluding RM1.1 billion forex gain, TNB recorded a core net profit of RM445.5 million for 3Q FY2024, marking a significant decline of 48.4 per cent year-on-year and 65.6 per cent quarter-on-quarter.

The drop was attributed primarily to lower imbalance cost pass-through (ICPT) revenue of RM625.8 million while operating expenses saw a reduction of only RM146.4 million.

“Overall, the nine-month (9M) FY24 results were below both our and consensus full-year estimates at 65.9 per cent and 65.3 per cent respectively, with the deviation mainly coming from higher-than-expected operating costs,” it said in a note.

Nevertheless, Public Investment remains optimistic, leaving its forecasts unchanged, anticipating positive contributions from the Genco segment, bolstered by favourable coal price and forex movement, and expecting Manjung 4 to return online in 4Q.

“Electricity demand is continuously growing at 6.1 per cent year-on-year. Actual unit electricity sold in 9M FY2024 exceeded the base sales forecast in Regulatory Period 3 (RP3) by 11 per cent. Notably, TNB has returned about RM1.7 billion of revenue to the government due to revenue and price cap mechanisms.

“We expect the finalisation of RP4 by December 2024 to be favourable for TNB. As such, we maintain our ‘outperform’ call and target price of RM16,” the bank noted.

Similarly, CIMB Securities Sdn Bhd remains positive, citing robust local electricity demand as a key driver for increased investment into TNB’s grid under RP4.

“This will substantially increase its regulated asset base, driving its earnings growth over FY2025–FY2026. We maintain our FY2024-FY2026 core earnings per share estimates, a sum-of-the-parts target price of RM16.89, and a ‘buy’ rating, pending further details from TNB’s 3Q analyst briefing,” it noted. — Bernama