– The outperformance in stock price was a pleasant surprise, although the drivers behind it are likely unsustainable in my view. Nevertheless, 1Q was not a representative quarter in any case, as the new tariffs (+15%) to end-users are only effective in Jan 2014.
– I remain positive on TENAGA as I believe
i) consensus has yet to incorporate the full earnings accretion from the tariff hike and,
ii) the reduced earnings risk under the Incentive-based Regulation (IBR) has not been fully priced in.
– I will continue to hold TENAGA even if I sold 60% of stakes. I may accumulate TENAGA a bit if there is a new growth driver.
Latest Financial – Q1 2014 Financial Report (23 Jan 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1523449
At the time of writing, I owned shares of TENAGA.