Tenaga: Top-line & bottom-line declined q-o-q

Results Update

For QE28/2/2015, Tenaga's net profit dropped 8% q-o-q but rose 24% y-o-y to RM2.156 billion while revenue was equally mixed - down 3.8% q-o-q but up 6.1% y-o-y to RM10.610 billion. Revenue dropped q-o-q due to 1.4%-drop in demand in both the Peninsula and Sabah.This coupled with the strengthening of the USD via-a-vis the Ringgit resulted in a q-o-q drop in NP.


Table 1: Tenaga's last 8 quarterly results


Chart 1: Tenaga's last 29 quarterly results

Valuation

Tenaga (closed at RM14.58 yesterday) is now trading at a trailing PER of 10.9 times (based on last 4 quarters' EPS of 134 sen). At this PER multiple, Tenaga is deemed fairly attractive.

Technical Outlook

Tenaga is in an uptrend since late 2011. Tenaga broke above its large expanding triangle in late 2013 at RM11.00 to close at a high of RM15.08 on January 26. From the chart, we can see that Tenaga's MACD is showing signs of topping out as follows:

1. The MACD histogram is approaching zero
2. The MACD is poised to cut below the MACD signal line

The other thing to note is that Tenaga & its 10-m SMA line and 20 & 30-m EMA lines are all spread out. That's the same pattern you may notice when Tenaga peaked in 2000 & 2007.

Finally, you may notice the sharp rally on February 4 which pushed the stock to an intra-day high of RM16.96. If Tenaga were a small-cap stock - it is not - I would interpret this unusual price action as an attempt by a large shareholder to distort the technical reading. After reading the many articles on the subject of the 2010 flash crash, I believe anything is possible in the world of finance these days!


Chart 3: Tenaga's monthly chart as at April 27, 2015 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance, attractive valuation and positive technical outlook (albeit signs of weakness), Tenaga remains a good stock for long-term investment. However, you may want to consider SELLING INTO STRENGTH for reasons noted above.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Tenaga.