Fuel cost absorption seen having minimal impact on TNB earnings
KUALA LUMPUR: Tenaga Nasional Bhd's (TNB) additional RM120 million to RM150 million fuel cost absorption for households is expected to have only a minimal impact on its earnings, according to RHB Research.
Tenaga Nasional Bhd (TNB) anticipates that the RM120 million to RM150 million fuel cost absorption for households will have a minimal effect on its earnings, according to RHB Research analyst Max Koh. The allocation, set for the September to December period, would represent approximately two to three percent of the research firm's FY26 earnings forecast for the utility company.
This support aims to extend electricity bill exemptions to households consuming between 600 and 800 kilowatt-hours (kWh) per month, previously limited to those using less than 600kWh per month. The extension covers the automatic fuel adjustment, retail charge, and sales and service tax, shielding more than 90 percent of residential customers from higher fuel prices.
Koh noted that the share price of TNB has declined by 12 percent from its recent high, offering an opportunity to buy the stock at a discount. He expects TNB's earnings to improve in the second half of FY26, with a lower effective tax rate (ETR) providing further support. The Energy Commission expects coal prices to remain at US$122 per tonne until year-end, while Tier-2 gas prices will stay at RM59 per million British thermal units, 17 percent below their peak in June.
The Electricity Industry Fund (KWIE) could potentially subsidize fuel costs, with a current balance of RM1.7 billion. Koh maintains a "Buy" recommendation on TNB with a price target of RM16.50 and an estimated FY26 dividend yield of about four percent.
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