COMMENTS ON TENAGA NASIONAL BHD (5347)


FIGURE 1: TENAGA NASIONAL BHD LAST 5 YEARS SHARE PRICE TREND

**analysis based on 2018 annual report.
1.       GENERAL INTRO: TENAGA NASIONAL BHD (TNB) is the largest utilities company in Malaysia.

2.       NOTABLE POINTS:
a.       In 2018 report, TNB reported a total domestic generating capacity of 10,917.53 MW, domestic transmission network of length 23,082 km, domestic distribution network length of 660,038 km, services reach ~9.65 million customers and total units of electricity sold of 118,814.46 GWh.

3.       IS THIS COUNTER A STRONG GROWTH STOCK? 
a.       REVENUE RANGE (RM million): 50,392.5 million as reported in 2018 annual report, this is a high revenue company.
b.      SHARE PRICE: from 2015-2020, share price ranged from ~ RM10.00 to RM16.00.
c.       EARNING PER SHARE (EPS): earning per share in last 5 years was fluctuating, ranging from 65.4 to 130.2sen
d.      FUTURE POTENTIAL/PROSPECTS: share price expect to be stable in the next few years
e.      CAPITAL EXPENDITURE (CAPEX): spending on purchase of new fixed assets is RM 11,819.3 million, around 7% of total assets.

4.       IS THIS A STRONG DIVIDEND STOCK?     
a.       DIVIDEND YIELD: in 2018 financial year, TNB declared a dividend payout of 53.27 sen per share to shareholders, which amounts to a dividend yield of 4.11%.
b.      DIVIDEND PAYOUT RATIO: Hence, in 2018 financial year, TNB paid out 81% of its earnings to shareholders in the form of dividend.
c.       CONSISTENCY: the dividend payout was consistent, the dividend paid to shareholders in the last five years ranged from 29 to 61 sen.

5.       IS THE MANAGEMENT PERFORMANCE GOOD?
a.       RETURN ON EQUITY (ROE): in 2018 financial year, TNB reported a moderate return of shareholders’ equity, at 8.3%. last five years ROE ranged from 8.3 to 16.3%
b.      COST-TO-INCOME RATIO: cost-to-income ratio is high, at 898%.

6.       OTHER INDICATORS:
a.       CASH FLOW: cash flow is positive, around RM 7,598 million, equivalent to RM 1.33 per share.
b.      SUPPORT BY INSTITUTIONAL INVESTORS: this counter is very well supported by institutional investors, there are 30 institutional investors at top 30 major shareholders list, including LEMBAGA TABUNG HAJI (0.53%), EPF (13.87%), PERMODALAN NASIONAL BERHAD (2.7%), SKIM AMANAH SAHAM BUMIPUTERA (9.1%), KUMPULAN WANG PERSARAAN (DIPERBADANKAN) (5.42%) and insurance companies/investment funds. Its major shareholders is Khazanah Nasional Berhad (28.76%).

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