Under the NETR, the group will be able to expedite its investments into energy transitioning to diversify earnings base and support future earnings growth, the HLIB’s research arm said.

At the same time, this initiative aligns with TNB’s commitment to enhance its environmental, social and governance profile.

In a note today, HLIB has maintained its “buy” call on TNB at RM9.60 with an unchanged target price of RM12.

It also expects the group to announce a stronger dividend payout in the financial year 2023 (FY2023) as it tries to regain investors’ confidence.

HLIB noted that TNB has announced the full recovery of RM10.4 billion Inflation Cost Pass-Through (ICPT) subsidies for the first half of 2023 (H1 2023) from the government recently.

Together with the recent decline in fuel energy prices, HLIB believes that these factors will improve TNB’s balance sheet and cash flow.

“We understand that coal prices have trended further downwards from July to August, while gas prices were relatively stable.

“As such, we expect the average fuel energy costs for the Malaysian power industry to follow a similar downtrend, benefitting TNB in terms of lower working capital requirements in upcoming quarters,” HLIB analyst Daniel Wong said.

As at 12.25pm, TNB’s share price was up two sen or 0.21% at RM9.62, giving the group a market capitalisation of RM55.73 billion.