Net profit for the full year came in at RM3.46 billion, a 5.1% drop from RM3.66 billion in FY2021.
The slump in net profit was due to higher tax expenses with cukai makmur (prosperity tax) for FY2022 amounting to RM340.8 million, but offset by the higher foreign currency translation gain in the current quarter, the group said in a filing with Bursa Malaysia.
Its net profit was also dragged by higher finance cost and tax expenses.
The dip in profit was despite a 3.1% increase in Q4 revenue to RM12.92 billion from RM12.53 billion a year ago due to high electricity sales.
The board declared a final single-tier dividend of 26 sen per share, with the payment date to be announced in due course, bringing the year’s total to 46 sen per share.
Interestingly, the total dividend for this financial year was 15% higher than FY2021 (total 40 sen) despite net profit for the year being lower than FY2021.
TNB’s receivables grew substantially this quarter, compared to the corresponding quarter a year ago. The sum stood at RM22.83 billion for Q4 FY2022, a 53.8% increase from the previous year.
Quarter-on-quarter growth was more marginal, tracking a 2.36% growth to RM22.83 billion from the preceding quarter (RM22.3 billion).
“The continued high fuel prices in H2 2022 has resulted in TNB carrying higher receivables and borrowings balances,” it said in a Bursa filing yesterday.
TNB recorded borrowings of RM63.88 billion – 20.7% of which are short term and 79.2% are long term — up 23.62% from RM51.68 billion posted in Q4 FY2021.
Borrowings from the preceding quarter was at a similar level of RM62.86 billion.
Analysts at odds?
Investment banks and research houses have announced a variety of calls on the stock, referring to the utility giant’s lower profits but healthy power demand.
MIDF Research downgraded TNB to ‘neutral’ from ‘buy’ but maintained a target price of RM10.
Its earnings missed their expectations, coming in at only 86% of MIDF’s estimate and 80% of the consensus. Hence, the research house found the dividend a ‘surprise’.
“The 70% payout that it implies is higher than Tenaga’s policy of a 30%-60% payout,” it pointed out.
“Despite a more favourable outlook going forward, we believe the positives have largely been reflected in the share price at current levels. As such, we downgrade Tenaga,” MIDF said.
Kenanga Research also downgraded its ‘outperform’ call to ‘market perform’ with a target price of RM10 from RM10.17.
It expects constraints on TNB’s cash flow to be gradually alleviated, in line with the improved cash flow outlook.
On the other hand, Hong Leong Investment Bank Bhd maintained its ‘buy’ call on TNB with an unchanged target price of RM11.65, citing the giant’s stable earnings and committed dividend payout.
“We expect the amount (of receivables) to drop in the coming quarters following the higher approved imbalance cost pass-through (ICPT) amount (RM16.2 billion) for H1 FY2023 and the current downtrend of global coal prices in recent months,” the bank said.
Receivables peaked in Q4
Similarly, PublicInvest Research maintained an ‘outperform’ call with a target price of RM12.42, confident in TNB’s ability to resolve the ICPT issue.
The expansion in receivables and borrowings was due to a timing mismatch in the upfront payment made by TNB and recovery of surcharges, it said.
“Nevertheless, the group remains confident that the situation will be resolved in H1 2023, with the remaining ICPT receivables (RM16.9 billion or 76.8% of receivables) to be paid in five equal instalments,” it added.
Maybank Investment Bank also held firm on its ‘hold’ call with a target price of RM10.
Despite contrasting calls, most of the banks and research houses agree that TNB’s receivables have peaked this quarter, and will deflate slightly for FY2023.
At the close of trade today, TNB’s share price fell 27 sen or 2.8% to RM9.37, giving it a market capitalisation of RM53.91 billion.
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