Tenaga Nasional Bhd, Malaysia’s biggest electricity producer, slid in Kuala Lumpur trading after reporting its first quarterly loss in almost three years on higher fuel costs.

The stock dropped 4 per cent to RM6.26 at 9:35 a.m. local time, the worst performer on the benchmark FTSE Bursa Malaysia KLCI Index, after banks including Citigroup Inc and Credit Suisse Group AG cut their forecasts.

“We had expected a poor set of results due to the gas- curtailment problem, but this exceeded even our expectations,” Annuar Aziz and Tan Ting Min, Kuala Lumpur-based Credit Suisse analysts, wrote in a report. They downgraded Tenaga to “neutral” with a reduced share estimate of RM6.20, describing the result “shockingly poor.”

The utility posted a net loss of RM440.2 million (US$147 million), or 8.1 sen a share, in its third quarter ended May 31, after being hurt by higher power generation costs due to a shortage of gas and rising coal prices. This compares with net income of 1.11 billion ringgit, or 20.4 sen a share, a year earlier, the Kuala Lumpur-based company said late yesterday.

Full-year results will be “severely affected” by coal prices and the acquisition of alternative fuels due to continued lower gas supplies, its statement said. “It’s going to be quite challenging,” Chief Executive Officer Che Khalib Mohamad Noh told reporters in Kuala Lumpur yesterday.

Reduced Supply

State oil company Petroliam Nasional Bhd. has cut gas supply while conducting maintenance at its plants. Tenaga has been buying oil and distillate, more expensive alternative fuels, from local suppliers to compensate. Its fuel bill rose to RM2.1 billion in the quarter, including an additional bill of RM1.3 billion for oil and distillate, Chairman Leo Moggie told reporters.

Petroliam Nasional, or Petronas, will conduct three more maintenance exercises this year, which will continue to limit gas supply, Che Khalib said.

At the same time, Tenaga said it paid an average US$109 per metric ton for the coal used to power its plants, up 18 per cent from the same quarter a year earlier. The company’s profitability falls 18 per cent for every increase of US$10 per ton in coal prices, Che Khalib said in January.

To help pass on costs, Prime Minister Najib Razak’s government allowed Tenaga to raise electricity charges for the first time in almost three years, by an average 7.1 per cent starting in June.

‘Not Much Help’

The increased electricity tariffs haven’t helped much, Che Khalib said. “It costs six times more to generate electricity using oil and distillate,” he said.

AmResearch Sdn Bhd cut its 2011 fiscal year earnings estimate by half to RM974 million. “Although we have been warning in our reports since April this year that Tenaga will be affected by Petronas’s natural gas curtailment, the impact was much worse than we anticipated,” analyst Alex Goh wrote in a report today, reducing his fair value to RM6 from RM6.60.

Citigroup downgraded the company to “sell,” with analyst Ng Yong Yin cutting his share estimate to RM6 ringgit from RM7.90 in a report today.

Tenaga last reported a quarterly loss in the three months ended November 2008. -- Bloomberg

Read more: Tenaga downgraded, stock tumbles http://www.btimes.com.my/Current_News/BTIM...l#ixzz1So9giXzG

Tenaga downgraded, stock tumbles (From: Business Times  Jul-22-2011 9:22 AM (3 hours, 45 minutes ago))
As expected by analysts, Tenaga suffers net loss ( From: The Star Online  Jul-22-2011 8:28 AM (4 hours, 39 minutes ago))



Other news:

Tenaga posts RM440 million Q3 loss on higher fuel cost
From: The Malaysian Insider  Jul-22-2011 3:10 AM (9 hours, 57 minutes ago)

UPDATE 1-Tenaga posts third-quarter loss on extra fuel costs
From: Reuters UK  Jul-22-2011 1:43 AM (11 hours, 24 minutes ago)

DJ Tenaga Nasional Swings To 3rd-Quarter Net Loss MYR440.2 Mln
From: TradingCharts.com  Jul-21-2011 5:43 PM (19 hours, 23 minutes ago)

Tenaga posts Q3 loss of RM440.2m
From: Business Times  Jul-21-2011 5:21 PM (19 hours, 46 minutes ago)

already price hike and unfair estimation calculation (estimate bill) also on loss?    

aiyah,time to buy TENAGA lor 

Leading market position

TNB is one of the largest electricity utility companies in Malaysia in terms of market capitalization. It is engaged in the generation, transmission, distribution, and sale of electricity. The company is one of the leading power companies in Malaysia with assets exceeding MYR74.1 billion (approximately $ 22.3 billion) as of August 2010, and a customer base of approximately 7.9 million throughout peninsular Malaysia, Sabah, and Labuan.

The company operates six thermal generation plants and three hydro generation reservoirs in Malaysia. As of August 2010, TNB's generation business unit had an installed capacity of 9,109 MW, comprising 7,198 MW thermal and 1,911 MW hydro capacities. The capacity market share of TNB totaled 41.9% in FY2010. Leading market position in a market with high barriers to entry gives it a competitive advantage with a strong brand image.

Superior service quality

TNB supplies electricity to approximately 7.9 million customers in Malaysia. The company had undertaken several initiatives in FY2010 to enhance its service quality for a reliable and continuous supply of electricity to its customers. It introduced new technologies to automate and enhance various processes. TNB enhanced its electronic customer information billing system (e-CIBS) by adding an e-DAS or disconnection activity via SMS module. The company completed the roll out of the second phase of the remote meter reading (RMR) low voltage and medium voltage project, which has improved the meter reading process by eliminating manual processes and human error. TNB's outage management system (TOMS) assists the company to respond quickly to outages by improving communication between customers, the TNB Contact Centre and technical crews.

In FY2010, TNB recorded an unplanned outage rate of 2.7%, surpassing the global industry benchmark of 4% for the fifth consecutive year. Furthermore, TNB has recorded the lowest ever transmission system minutes time of 0.85 minutes in FY2010 compared with 1.3 minutes in FY2009. The distribution system average interruption duration index (SAIDI) was reduced to 65.02 minutes from 72 minutes in FY2010.

Superior service quality enhances the brand image of the company and enables it to attract customers and increase its market share. This adds to competitive advantage of TNB.

Increasing focus on diversification

TNB is focusing on diversifying into new businesses to expand its business portfolio. The company has ventured into different business areas that include manufacturing, services and consultancy, and education.

In the manufacturing sector, TNB through its various subsidiaries produces a wide range of energy sector-related products such as distribution system transformers, power cables, optical ground wires, low voltage general cables, conductors, high voltage and gas insulated switchgears, circuit breakers, and disconnectors. The company also provides services and consultancy in managing and developing projects in district cooling systems, co-generation and building energy management, small renewal power, as well as repair and maintenance services for power plant equipment. In the education sector, TNB's wholly-owned subsidiary, Universiti Tenaga Nasional (UNITEN), offers courses in engineering, information technology, business management, and accounting.

TNB can leverage its strong market position in the power sector to increase its presence in other businesses. The increasing focus on diversification of business portfolio will reduce dependence of the company on a single sector. It will diversify its revenue stream and reduce the business risks of the company.

Geographic concentration

TNB's operations are highly concentrated in Malaysia. Although the Malaysian electricity market was liberalized in 1994, TNB has not diversified its operations on a large scale. The company's foray into Pakistan, Mauritius, and Singapore has not resulted in a significant diversification of revenues.

TNB has all of its generation capacities based in Malaysia and also generates all its revenues from Malaysia. The company's high dependence on Malaysia increases its business risk and also exposes it to local economic and operating conditions among others.

New projects

TNB is pursuing opportunities to increase its scale of operations. The company is currently working on two major hydroelectric projects, namely the Hulu Terengganu Hydroelectric Project with a planned capacity of 250 MW and the Ulu Jelai Hydroelectric Project with a planned capacity of 372 MW. These projects are scheduled for completion by 2013 and 2014, respectively. The company is also involved in joint ventures. It has projects of 300 MW coal-fired IPP in Sabah and 10 MW Jengka Biomass Power Plant in Pahang.

TNB is working towards moving away from gas to coal and hydropower to address fuel security issue. Currently, gas fires 53.1% of TNB's capacity, coal 34.1%, and hydropower 12.5%. These hydro projects would reduce the company's dependence upon gas to fire its capacity.

The investment in new projects would help TNB expand its generation capacity and secure its leadership in the industry for years to come.

Green energy initiatives

In tandem with the government's aspirations towards a low carbon economy, TNB plans to adopt strategies and activities that will sustain and enhance the environment and natural resources for the future. TNB's major green initiatives include use of green substations, advanced network technologies, building efficiency, and having low carbon generation technologies by deploying nuclear and RE technologies in the future. These include the Nuclear Power Plant (NPP) in 2021, 5 MW solar photovoltaic (PV) plant in Putrajaya, 10 MW biomass plant in Jengka, Pahang, mini-hydros, solar hybrids, and bio-gas. In addition, TNB has signed Renewable Energy Power Purchase Agreements (REPPA) to purchase RE energy under Small Renewable Energy Program (SREP). The company is currently carrying out a study on the possible implementation of smart grids in selected sites in Kuala Lumpur, Johor, and Penang. This essentially involves the application of communications and ICT technology to upgrade the current electric power grid so that it may operate more efficiently, reliably, and safely while offering additional services to consumers to reduce cost and carbon dioxide (CO2) emissions. Adopting environmental friendly measures helps the company improve its brand image along with meeting the regulatory compliances.

Increasing payments to independent power producers (IPPs)

The company has no control over payments to independent power producers (IPPs). The government has permitted IPPs as part of its liberalization program. Subsequently, TNB was directed by the government to purchase electricity from IPPs like Malakoff and YTL Power Generation at fixed prices. The approval of new IPPs and the negotiation of purchase power agreements fall under government control. In FY2010, the increase in energy costs was mainly due to higher payment to IPP, totaling RM12,528.0 million (approximately $ 3783 million), an increase of 5.9% compared to the previous financial year. Lack of control over payment to IPPs pressurizes TNB to absorb any increase in other costs such as fuel purchase, which could lower profit margins.

Energy supply security and constraints

The depletion of energy resources such as gas, and limited international coal supply sources and infrastructure are posing challenges to the power sector in Peninsular Malaysia. The region is heavily dependent on imported coal. The high volatility of international energy prices, especially of coal, is contributing to the energy supply security and constraints. The company witnessed 6.1% increase in operating expenses due to higher coal prices in FY2010.

In addition, the high usage of fossil fuel for power generation could pose environmental issues as a result of emission of greenhouse gas. Therefore, the rising energy supply security and constraints pose a risk of inadequate supply of fuel to TNB for its generation plants. This in turn could affect the generation operations of the company resulting in declining volumes for sale.

Currency risk

TNB faces foreign currency exchange risk mainly from borrowings denominated in foreign currencies. The main currency exposures are primarily in US Dollar and Japanese Yen. The company also enters into contractual obligation where the payment is denominated in foreign currencies. TNB has subsidiaries, associates, and branch operating in foreign countries, which generate revenue and incur costs denominated in foreign currencies. High volatility in the currency exchange rate can adversely impact the financials of the company.

Jul-22-2011  DBS Vickers Research NG, June Target Price  Current: 7.34 Previous : 7.39

it's time to buy again

big price drop yea ... maybe there is a problem with the company. It went up almost 18% and now it drops back.

good time to collect?

yeah...sure for long term...
something will change to recover...

Yeah, you're right. It's time to revenge back. It's the low time now.
Can keep bit for invest