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Thursday, June 08, 2017

Tenaga: You Have Other Plan?

Yesterday I posted  about Tenaga's strong rally on June 5. My belief was that the rally was a "window dressing" activity to prop up FBMKLCI above the recent high of 1785. Two days after the initial push-up, Tenaga is still hovering around RM14.20. There was good buying support yesterday and more importantly, the selling pressure seems to have subsided today. Such market action warrants a re-examining of the stock! 

Technical Outlook

Tenaga broke above its downward channel (RR-R"R") in March. It was not a convincing breakout as the share price slid back and leaned against the earlier downtrend line, RR for support. Eventually an upward channel was formed (SS-S"S"). Two days ago, Tenaga broke above the upper line (R"R") of this channel. Does this mean that the uptrend for Tenaga is about to accelerate?


Chart 1: Tenaga's daily chart as at Jun 7, 2017 (Source: MalaysiaStock.biz)

Tenaga is trading quite close to its recent high at RM14.50. Can Tenaga surmount enough buying support to break above the recent high?


Chart 2: Tenaga's weekly chart as at Jun 7, 2017 (Source: MalaysiaStock.biz)

Results Update

For QE28/2/2017, Tenaga's net profit was mixed- dropped 15% q-o-q but rose 12% y-o-y - to RM1.48 billion while revenue was similarly mixed- dropped 1% q-o-q but rose 6% y-o-y - to RM11.16 billion.Tenaga reported a lower operating profit of RM1,98 billion as compared to RM2,34 billion in the preceding quarter. This was due to a marginal decrease in revenue of RM79.3 million and higher operating expenses of RM255.5 million. (Tenaga's latest result was announced on April 27.)

 
Table: Tenaga's last 8 quarterly results


Graph: Tenaga's last 41 quarterly results

Valuation

Tenaga (closed at RM14.20 yesterday) is now trading at a PER of 11 times (based on last 4 quarters' EPS of 129 sen). At this PER, Tenaga is deemed fairly attractive.

Conclusion

Based on attractive valuation & positive technical outlook, I consider Tenaga to be a good stock for long-term investment. If you choose to treat my earlier post as a TRADING SELL call, you can do so provided you are nimble enough to jump back in if the stock cleared the recent high of RM14.50 (adjusted for dividend) or RM14.90 (unadjusted for dividend). Good luck!

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

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