Posted last night: Tenaga may post RM1b quarterly loss
Received the following set of 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.
=>>>>
Jason,
Let me share my flawed one sen view with you.
As mentioned before to you, I believe so much that one should always remember that what one's owe the bankers currently is based at current rates and if the borrowing is made on foreign currencies, what one OWES is based on the current exchange rates.
Think about it.
That's how I always view it.
Forex losses and gains are part of the existing economics of the particular business that indulges in foreign denominated fundings. And what one OWES is based on what the current forex rates.
For Tenaga case, one could argue last time, the positives about borrowing in Yen for it was a rather 'cheap' currency for one fundings needs. No one expected Yen to soar against the ringgit but it has.
Tenaga a fundamental stock?
Perhaps a fundamentally flawed stock if you ask me.
Of course I am always flawed.
Tuesday, January 20, 2009
Tenaga's Forex Losses
Subscribe to:
Post Comments (Atom)
Posts
1 comments:
True true... There are many different ways to look at it... the thing is, Tenaga basically has over RM10billion in Forex debt, so exchange rates swinging 10% either way is 1b profit loss... I do not blame TNB management for this forex loss. Nor will I heap praise on them if the RM strengthens against the USD and Yen, and TNB makes announcements that their profit jumped to RM3 billion! Or imagine if the Dollar collapses, as some people are hypothesizing... Tenaga might make windfall gains of RM3 billion not including their operating profit of RM1 billion?
... Or the ringgit might drop like a rock, and they might make losses of billions of RM...
...
Basically, to me, during periods where the exchange rates are volatile is tatamount to someone walking into the casino and gambling their entire years salary on red or black. I think that performance either way does not reflect MANAGEMENT SKILL, but rather LUCK... or you could say it was stupidity on part of management to walk into casino in the first place!
Anyhow... you are right. Tenaga is fundamentally flawed. It is no longer a blue chip company.
The reason is simple: It's monopoly has been severely weakened, due to IPPs and tariff revisions and similiar. Furthermore, they have way too much foreign debt.
Basically, for a blue chip, you want CONSISTENT, reliable income. Tenaga is now a company that, instead of DICTATING price and thus profits, is more or less subject to a LOT of forces outside it's control.
Tariffs go up? watch profit go up. Tariffs down? profit drops. Forex gain. Forex loss. IPPs negotiate different price. Fuel prices fluctuate...
And these are not small movements. You can expect Tenaga's annual profit go anywhere from RM2 billion profit to RM2 billion loss.
...
I would no longer hold TNB in my long term portfolio... I would treat it like a 2nd board company. Buy on speculation of profit jump, sell on prediction of losses.
I wouldn't call the company fundamentally flawed though... NOT YET. But... the Tenaga of today is definitely not the Tenaga of 10-20 years ago. I wouldn't say it's THAT bad... yet... but it's definitely heading downhill.
Post a Comment