UOB Kay Hian Research said the sector would offer good earnings visibility, as TNB would maintain its 7.3% return on transmission and distribution assets next year.
“This comes on the back of an 8% year-on-year contraction in 2020’s sector earnings, ” the research house added. “While we do not discount further CSR contribution from TNB at least until the fourth quarter this year , we opine that the current valuation has partly priced in the regulatory risk, ” it said.
Meanwhile, UOB Kay Hian Research said that TNB would benefit from a gap year between Regulatory Period 2 from 2018 to 2020 and Regulatory Period 3 from 2021 to 2023.