In a research note today, PIVB said electricity demand continued to grow, with commercial and retail segments remaining the major drivers, leading to another peak demand record at 20.07 gigawatts in July 2024.
It said the actual unit electricity sold in the second quarter ended June 30, 2024 (Q2 FY2024) far exceeds the forecasted base sales set in Regulatory Period 3 (RP3), growing by 12%.
“TNB is required to return about RM1.1 billion of revenue to the government due to revenue cap and price cap mechanism.
“We expect the finalisation of RP4 will have a more equitable return to TNB-regulated assets to ensure the system’s resilience amid growing energy demand,” PIVB said.
Meanwhile, CIMB Securities Sdn Bhd believed the utility company is the primary beneficiary of the government’s decarbonisation agenda, benefitting from increased Regulated Asset Base (RAB) due to higher investments in TNB’s grid infrastructure and enhanced contributions from its Genco business.
“Potential downside risks include an unfavourable outcome for RP4 2025-27 and delayed resolution of its Manjung coal plant outage,” it said.
CIMB Securities maintained its “buy” call on TNB.
On the other hand, Hong Leong Investment Bank (HLIB) opined that the surge in power demand above the regulated 1.8% growth does not benefit TNB under the current regulatory period, as its transmission and distribution segment is regulated under the Incentive-based Regulation (IBR) mechanism.
“Nevertheless, the strong growth may provide a higher base for TNB’s upcoming RP4 2025-2027 with potentially higher allowable capex spending.
“Given the stable coal prices, we do not anticipate further huge fluctuations in fuel margin recognition in the second half of FY2024,” HLIB said.
TNB’s net profit soared nearly fourfold to RM1.44 billion in Q2 2024, up from RM327.9 million in the same quarter last year.
The rise was primarily due to a higher operating profit, favourable foreign exchange translation, and lower net finance costs.
Revenue also widened 7.88% to RM14.37 billion from RM13.32 billion previously, driven by higher electricity demand.
As at 3.18pm, TNB’s share price was up by 70 sen or 5.02% at RM14.64, giving the group a market capitalisation of RM85.10 billion.