Monday, January 19, 2009

Aseambanker's Warning On Tenaga And Tenaga Post Massive Losses!

Published this morning: Tenaga may post RM1b quarterly loss


  • Maybank Investment Bank reiterates 'hold' rating on the stock

    TENAGA Nasional Bhd, Malaysia’s state-run power utility, may post a quarterly loss of RM1 billion (US$280 million) after a weaker ringgit increased foreign debt costs, Maybank Investment Bank Bhd said.

    The Kuala Lumpur-based electricity provider, announcing results for the three months ended November 30 today, may incur foreign-exchange losses of about RM1.4 billion for the quarter, Ong Chee Ting, an analyst at Maybank, said in a report. Tenaga made RM1.51 billion in profit a year earlier.

    “While these losses are not immediate cash outflows to Tenaga, their enormity is likely to spook investors,” Ong said. Slowing demand for power in Malaysia in the global recession and higher average coal costs also weighed on earnings, he said.

    Debt denominated in foreign currencies, mostly the US dollar and the Japanese yen, accounted for almost half of Tenaga’s borrowings of 22.7 billion ringgit last fiscal year. The ringgit has lost 9.2 per cent against the dollar in the past six months and declined 23 per cent against the yen.

    Maybank cut its earnings forecasts for Tenaga for the years ending August 2010 and 2011 by between 22 per cent and 24 per cent. Ong reiterated his “hold” rating on the stock.

    At midday, Tenaga shares Tenaga was flat at RM6. - Bloomberg

Firstly Tenaga closed the day up 5 sen at 6.05!

And Tenaga just released their earnings.

It was NOT pretty!

And this what's said in the earnings notes.


As a consumer, frankly I am appalled by Tenaga's earnings.

I look at my bills and I see myself paying more than 25% increase on my monthly electrical bills. And despite consumers paying more (Tenaga's sales revenue increased by 27% compared to the corresponding quarter last financial fiscal year), this whopping losses of 944 million is simply beyond my comprehension.

Why? How? What?

Sigh!

4 comments:

Jasonred79 said...

Let's look at it "profit from BUSINESS ACTIVITIES" perspective.

In 2007, Tenaga made RM1.5b ... partially due to a 242million gain on forex. (so that's 1.25 billion profit from biz)

In 2008, Tenaga lost 944 million, due to 1.44b loss on forex. Discounting that, they only made RM 500 million profit based on their business.

At the end of August 2008, Tenaga's US dollar-denominated debt amounted to 6.29 billion ringgit, while its Japanese yen-denominated debt was 4.5 billion ringgit.

There you go... basically, Tenaga's balance sheet get's whacked pretty badly whenever the RM slides against the USD and Yen. ... actually, Tenaga must be morons for borrowing in currencies which tend to strengthen... imagine if tenaga had borrowed in Zimbabwe money! Hahaha! By now, their debt would have shrunk to peanuts!

...

Personally, I don't like to look too much into forex gains and losses, since forex gain and loss can reverse anytime. Furthermore, from the perspective of an international investor, Even though tenaga's debt in RM terms has ballooned, it's debt in USD terms is pretty constant.


However, even discounting forex, it looks like profit slid from 1250 million to 500 million. How Tenaga managed that, considering the 27% jump in revenue, I DON'T KNOW.

Kris said...

Perhaps they pay even more to IPPs?? Because of the way the contract is structured, Tenaga needs to pay unused electricty generated by them.

Jasonred79 said...

Exactly, Kris... I would say that Tenaga is going to be facing really volatile earnings for the foreseeable future... maybe PERMANENTLY.

I wouldn't touch the company with a 10 foot pole, really.

CP said...

Hey guys, just want to agree that I won't touch TENAGA for a longer term investment. Bear in mind that Malaysia politicans need to EAT too. Tenaga may needs to pay some 'flower-red' to them, u know. Hehe

TEH