KUALA LUMPUR: AmResearch is maintaining a Buy on Tenaga Nasional Bhd with an unchanged fair value of RM10 a share, based on a 10% discount to discounted cashflow of RM11 per share.

“We maintain Tenaga's FY10F-FY12F net profit even though 9MFY10 core net profit of RM2.1bil came in below expectations. Tenaga's 9MFY10 net profit accounted for only 63% of our and street estimate of RM3.1bil,” it said.

AmResearch said on Thursday, July 15 it continues to like the stock due to:

(1) Resurgence in power consumption growth;

(2) Appreciating Ringgit;

(3) Improving economies of scale with declining power reserve margin - currently at 42%;

(4) Potential corporate moves such as bonus or increasing dividend  payout; and

(5) Return of foreign investors to one of the most liquid stocks on Bursa Malaysia.

“Valuation-wise, Tenaga currently trades at an attractive CY10F PE of 12x compared to its 3-year average of 14x,” it said.