TNB anticipates reasonable performance for 2022


TENAGA Nasional Bhd (TNB) foresees a reasonable performance in 2022 but remains cautious on high fuel prices and challenging economic outlook. 

In a filing to Bursa Malaysia yesterday, the power utility stated the view takes into consideration the implementation of Regulatory Period 3 (RP3) effective from Feb 1 this year. 

The group added it will continue to take prudent measures in terms of its operational and financial requirements to ensure it remains resilient. 

For the fourth quarter ended Dec 31, 2021 (4Q21), TNB registered a lower net profit of RM877.8 million compared to RM1.21 billion a year ago, mainly due to unfavourable foreign exchange and higher tax expense recognised in the current quarter. 

Earnings per share for the period stood at 15.35 sen. 

Revenue for the quarter, however, rose 52.4% year-on-year (YoY) to RM15.73 billion underpinned by the higher total sales of electricity mainly due to the under-recovery position of imbalance cost passthrough amounting to RM3.2 billion compared to the over-recovery position of RM1.55 billion in the corresponding quarter. 

Its operating expenses increased to RM14.49 billion or 63% YoY mainly due to higher fuel prices. 

Lower net loss on financial instruments was recognised in the current quarter coupled with higher operating income, resulting in a slight increase in TNB’s operating profit to RM118 million or 8.1% higher to RM1.57 billion.

For the full financial year ended Dec 31, 2021 (FY21), TNB’s net profit rose marginally 2% to RM3.66 billion from RM3.59 billion in FY20 on the back of a 19.7% increase in revenue to RM52.63 billion from RM43.98 billion in FY20. 

The group declared a final dividend of 18 sen per share for FY21. 

TNB noted its resilient performance for FY21 was mainly underpinned by electricity demand growth of 1.2%, consistent with the country’s GDP growth of 3.1%. 

It said the year proved to be challenging as it faced challenges in the collection of electricity debtors and global increase in coal prices. 

“The economy is expected to remain on its recovery path supported by continued expansion in global and domestic demand. 

“For the year 2022, the government is maintaining the country’s economic growth forecast of 5.5% to 6.5%. 

“However, the effect of Covid- 19 related factors and inflation may still impact the growth trajectory,” the utility stated in its release yesterday. 

In a separate Bursa Malaysia announcement yesterday, TNB said the government, via a letter from Suruhanjaya Tenaga dated Jan 28, 2022, had approved the implementation of the RP3 under the Incentive-Based Regulation framework from February 2022 to December 2024. 

The group added the current electricity tariff schedule that has been in place since 2014 will continue to be in effect, with no changes to the electricity tariff rate and tariff structure. 

According to TNB, the allowed operating expenditure under RP3 is RM17.96 billion, while capital expenditure (capex) is RM20.55 billion. 

These, together with a fair and reasonable regulatory return that is maintained as per RP2, will allow TNB to plan and perform necessary operation and maintenance work for all of its electrical infrastructure, and enable essential investment in the industry to ensure continuous and reliable electricity supply. 

“The allowed capex for RP3 is set to bring significant economic benefit towards stimulating the nation’s economic recovery. 

“Generation costs continue to be the largest cost component of the electricity tariff, where 65% of the tariff for RP3 is contributed by generation costs. 

“Gas and coal, both at market price, continue to be the main sources of fuel for the electricity generation for this period. Base coal price and gas price for RP3 period are US$79 (RM332) per metric tonne and RM26/MMBtu based on two-tier gas pricing,” it said. 

Shares of TNB closed two sen or 0.22% lower at RM9 yesterday, valuing the group at RM51.53 billion.