Tenaga Nasional Berhad (TENAGA) – Our Electrical Giant

Tenaga Nasional Berhad (TENAGA 5347)

TENAGA is the largest player in generating and providing electricity in Malaysia. I would argue to the point of being monopolistic.

They’re diversified geographically through equity ownership in the UK, Turkey, Saudi Arabia, Kuwait, India an Indonesia and Pakistan.

The company’s profits are tied heavily to foreign currency exchange rates, coal and gas prices.

The Numbers

TENAGA 2017 Financial Summary 5 Year
TENAGA 2017 Financial Summary

Increasing Profits Every Year

The electrical giant has been generating increasing revenue and profits consistently for 6 years now. One of the key criteria when I pick a stock to purchase.

With increasing profits comes increasing dividends for me as a shareholder.

Increasing Shareholder Equity Every Year

For 6 years now, TENAGA has consistently increased its Shareholder Equity also known as Net Assets annually. This is another huge check mark in Tenaga’s favor. 

We as shareholders will want a company that is constantly increasing its net assets. More assets mean more ways of generating income and also increase in stock prices.

Borrowings and Gearing

Total borrowings has increased to RM38.8 billion in 2017 with the gearing at 40.3%. An increase in borrowings is only worrying when the revenue decreases.

I do hope to see the gearing reduce to below the 40% mark in the future though.

Dividend Growth Perspective

TENAGA is a huge company, generating megawatts in electricity and dividends to its shareholders.

With the increasing profits every year, I’m not worried about the company delivering proportionally increasing dividends every year.

Valuation

At the time of writing, TENAGA is trading at RM13.980, at a P/E of 11.49.

The company is a little undervalued at the moment. I’ll continue to monitor the stock and purchase more when it drops below the RM13 mark again.

 

End.

TENAGA
Bought Price – RM14.12
Current Price – RM13.98
Capital Gain – (-0.99%)
Total 2018 Dividends – RM516,80
Dividend Yield – 3.66%

Disclosure: I hold 1,000 units of TENAGA shares in my Freedom Fund portfolio.

I will continue to hold onto TENAGA and look out for buying opportunities.

As always, my opinions and strategies are never intended to be a buy/sell recommendation. The strategy used has worked for me and it is for you to decide if it can be implemented into your own financial plan. Always do your own research and due diligence before investing.

A list of good dividend stocks in Malaysia can be found hERE.

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