TNB clarifies subsidy absorption a one-off contribution

Malaysian power utility Tenaga Nasional Bhd (TNB) has clarified that its decision to absorb additional electricity subsidy costs for low-consumption households is a one-time contribution. During an analyst briefing, TNB described the absorption of an estimated RM120-150 million in additional surcharges under the automatic fuel adjustment (AFA) mechanism as a "one-off corporate contribution."

The company reiterated this stance, emphasizing that it intended to cushion households from higher electricity bills between September and December 2026.

TNB's move to shoulder the additional subsidy costs came after the government announced that households consuming 800 kilowatt-hours (kWh) of power or less monthly will be exempt from the AFA surcharge, previously only applied to those using under 600kWh. The government is also working on a more permanent solution to address the current AFA design gap, though there is still uncertainty surrounding the new structure.

While TNB maintains its "hold" recommendation with a target price of RM13.80, TA Securities advised investors to accumulate the stock on share price weakness, expecting TNB to report stronger second-half earnings due to a projected decline in the effective tax rate. RHB Research also offered a bullish outlook, retaining a "buy" call on the stock with a target price of RM16.50, representing a 25% upside from its current price.

TNB's shares closed at RM13.14, a 0.3% increase that brought its market capitalisation to RM76.59 billion. The stock has declined by 4.6% year-to-date.