KINIBIZ Analysts say that state utility Tenaga Nasional’s prospects remain bright, even without any increase in electricity tariff rates this year.

Both Maybank Kim Eng and Hong Leong Investment Bank retained their buy calls on the counter in separate reports this morning. The two research houses are eyeing a target price of RM16 for Tenaga shares.

Yesterday, Prime Minister Najib Abdul Razak ( left ) announced that the scheduled electricity tariff hike this year is postponed - as is the scheduled gas price hike for the industrial sector - to reduce the cost of doing business.

The measure is part of Putrajaya’s strategy to boost the nation’s economic resilience following a Budget 2015 cut of some RM5.5 billion.

However, Maybank said that an electricity tariff hike was already unlikely prior to Najib’s announcement, because depressed coal prices at present means Tenaga’s coal costs are now trending below budget.

“Thus, we view the prime minister’s announcement as a non-event,” said Maybank.

Last July, Putrajaya skipped a scheduled six-monthly electricity tariff rates review under the previously announced Incentive-Based Regulation (IBR), which - among others - entails a cost pass-through mechanism to allow Tenaga to recoup additional costs via a regular tariff review.

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