The two main stocks in the energy sector is Tenaga & YTLPower. The two charts below tell the tale of two very different entities. One the victim of political exigencies, the other the benefactor of political largesse. This reminds me of the story of EON and Proton in early 2000. EON always made money and Proton always lost money. The reason: one is living off the other. I told my research analyst that the easiest solution is for the government to cause Proton to takeover EON or to distribute the Proton cars on its own. The analyst did not think that was possible. That was what happened when Proton set up Proton Edar to distribute its cars & cut off EON from that business.
Today, the government must re-examine the PPAs in order to lower the cost of power that Tenaga acquired from the IPPs. Until then, Tenaga will forever be the loser & the IPPs the winner in this business arrangement. Because of this lop-sided arrangement, Tenaga has to charge the consumers a higher price for power consumed.
Notwithstanding the above commentary, we can see that Tenaga should have support at the psychological RM5.00 level. If that level is breached, the next support is at RM4.00. YTLPower is still in a long-term uptrend line, with support at RM1.80.
Chart 1: Tenaga's monthly chart as at Sept 2, 2011 (Source: Tradesignum)
Chart 2: YTLPower's monthly chart as at Sept 2, 2011 (Source: Tradesignum)
5 comments:
Hi Alex
What is fair value for Faber? Currently trade at 1.65, and net cash of 45sen/share, give rise to PE of 9.7x. According to management, par value reduction from from RM1 to 25sen, is to set off all accumulated loss and pave the way for higher dividend payout. Based on last yr dividend of 8sen, faber have dividend yield of about 4.8%.
The main risk is renewal of its concession which is still pending decision from MOH. However, with its government link shareholder, PNB and newly emerge Lembaga Tabung Haji, its should have better chance of granting extension of its concession agreement.
dear alex,
wonder why ijm land is falling?
Alex,
Any idea why ytl power is falling??is it falling in tandem with general equity market or are there any insidious events in your opinion?thanks
Hi xinzhang & Ong,
All stocks drop in a market like this. The question to ask is why some stocks didn't drop.
IJMLand broke the strong horizontal support at RM2.40. Its next horizontal support is at RM2.20.
YTLPower is dropping on concern which I have highlighted in my recent post.
Hi hng
As you have rightly noted, Faber is likely to secure a renewal of the hospital support services concession with MOH. I did not check on your numbers, which look about right. You may recall I had posted on the company sometime back but I stopped following it as the management is less than forthright in its announcement to the public ( here ).
Chartwise, it broke its very strong horizontal support at RM1.65-1.70. The next strong horizontal support is at RM1.50.
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