Quick take: TNB top gainer on Bursa, up 36 sen

KUALA LUMPUR: Shares in Tenaga Nasional Bhd (TNB) jumped in early trade Wednesday, as investors reacted positively to its internal reorganisation of power generation and retail businesses.

The utility giant, the top gainer on Bursa Malaysia, jumped 36 sen, or 2.64% to RM13.98 with 955,100 shares traded.

TNB’s board has approved a proposed internal reorganisation which involves placing the group’s domestic power generation and electricity retail businesses under two new holding companies.

TNB said the transfer of its assets, liabilities and business undertakings to two new subsidiaries (GenCo and RetailCo), would improve the efficiency, agility and performance of the business segments of the TNB group of companies and promote ownership, entrepreneurship and innovation within the group.

The changes in its structure is projected by TNB to improve the TNB group’s performance and returns to the shareholders of TNB in the medium to long-term.

It added that the proposed internal reorganisation would provide flexibility in capital management and pursuing growth opportunities.

TNB said the proposed internal reorganisation is expected to be completed by the third quarter of 2020, adding that the exercise is not expected to have a material effect on the earnings and earnings per share of the TNB group for the financial year ending Dec 31, 2019.

Affin Hwang Capital Research has maintained its “hold” call for TNB with an unchanged target price of RM14.10.

The research house said the revamp was ahead of the upcoming regulatory changes under MESI 2.0.

Affin said the reorganisation would provide operational flexibility for its business segments to meet the required changes.

It said although the government has yet to announce details of the reforms under MESI 2.0, TNBbelieves that its retail business is likely to be liberalised and opened up to competition.

“If we use the changes as an indicator, MESI 2.0 is unlikely to cause major changes to TNB’s profitability,at least in the nearterm,” it said.

Source: TheStar