Analyst: Nur Diyana Qistina Khairil Anuar TENAGA NASIONAL Utilities / Electric Utilities & IPPs / Electric Utilities Report Date: 06 / 07 / 2022 BUY TABLE OF CONTENTS 1. Introduction 1.1 Company Stock Summary 1.2 Historical Stock Price Chart 2. Technical Analysis 2.1 Price and Volume Patterns 2.1.1 Support and Resistance 2.1.2 Volume Analysis 2.1.3 Candlestick Pattern 2.1.4 Price Pattern 2.2 Technical and Momentum cccccc Indicators 2.2.3 Moving Averages 2.2.4 Bollinger Bands 2.2.5 Rate of Change (ROC) 3. Price Forecast Company Name: Tenaga Nasional Website: https://www.tnb.com.my/ Nature of Business: Energy industry Category: Utilities / Electric KLSE Listing Board: Main Market Stock Code: TNB; TENA, MYX: 5347 1.0 INTRODUCTION Tenaga Nasional Berhad is a Malaysian company that generates, transmits, distributes, and sells energy both domestically and abroad. It manages and operates the National Grid, which is connected to Thailand and Singapore's transmission system. Tenaga Nasional Berhad also supports independent power producers and operates and maintains thermal generation facilities and hydroelectric power generating schemes. It also develops district cooling systems, operates and maintains cogeneration plants, manufactures, sells, and repairs distribution, power, and earthing transformers, and develops, owns, and manages dry bulk terminals. The company offers turnkey contracting for transmission substations, repair and maintenance services for heavy industries and other related services for telecommunication equipment and data centres, higher education and telecommunication and IT infrastructure solution and services, R&D services in engineering, and many more. There is no doubt that TNB is Malaysia's major power provider. In order to ensure the long-term viability of TNB, they also implement projects such as renewable energy and other environmental and social activities. This has made TNB one of Asia's major electric firms as they convert it into a domestic and regional champion. TNB has established a reputation in the area. Peninsular Malaysia, Sabah, and Labuan are home to 4.5 million TNB users. Commercial clients at TNB are our second-largest source of revenue, and they are responsible for the majority of the economic activity here. TNB's residential clients make up the bulk of Malaysia's population of 32.37 million people. TNB's biggest customer base is putting a lot of pressure on TNB to produce the best goods and services possible. 1.1 COMPANY SUMMARY
1.2 HISTORICAL PRICE CHART (SHORT TERM - 1 YEAR) A price chart is a sequence of prices plotted over a specific timeframe. In statistical terms, charts are referred to as time series plots. Based on figure 1, the stock price in January 2021 was RM10.49 and in 15 March 2021, announcement was made by Tenaga Bhd to Bursa on final and special dividend payment FY2020 with the closing share price of RM10.66. On the first quarter of financial year 2021 dated 28 May 2021, the closing share price has decreased to RM9.99. Followed in the second quarter of financial year 2021 dated 26 August 2021, the closing share price rose to RM10.30. On 9 September 2021, another announcement was made to Bursa about interim dividend payment with the closing share price of RM10.26 and in 26 November 21, the closing share price is RM9.38 and in last day of 2021, the closing price is RM9.30 dated 30 December 2021. Throughout the 1 year period, the highest price of Tenaga Stock was RM10.915 and that was on March 26th 2021 while the lowest price was RM9 dated on December 7th 2021. Tenaga Berhad was also able to generate revenue of RM52,629.5 million, about 20% higher than in 2020, which was RM43,976.0 million. The increase in its revenue is probably due to the economy growth which resulted for the company to recover from the previous COVID-19 breakdown. The high demand of its products and services has also been influenced by Tenaga Bhd. People use electricity more especially when the businesses are re-operating. Figure 1: Tenaga Nasional Historical stock price performance from July 2019 to June 2022 Source: TradingView https://www.tradingview.com/x/y4dYtXey/
2.1.1 SUPPORT AND RESISTANCE / TRENDLINE Technical analysts use support and resistance levels to identify price points on a chart where the probabilities favor a pause or reversal of a prevailing trend. The support level is located where there are two or more low prices hit the same level and resistance level is when two or more higher prices hit the same level. Based on Figure 2, the support resistance I have plotted is at RM8.880 where more than 3 candlesticks have hit the same level on the month of March, April, May and June and the resistance level is plotted at the price of RM9.24 where more than 3 candlesticks have hit the same level as well on the month of December 2021, February, March and May. Trendlines are lines drawn on a price chart indicating the general direction within a selected time frame and it acts as an indicator to see which pattern the stock is currently in and if the price will potentially increase or decrease. Based on the stock chart extracted from TradingView.com, there is one obvious trend which is going downward from September to December. A downtrend is when price action in a stock is moving lower over a period of time and is most recognizable by prices creating lower lows and lower highs. Stocks in a downtrend continue in a trend down until certain market conditions change the direction. 2. TECHNICAL ANALYSIS 2.1 PRICE AND VOLUME PATTERNS Figure 2: Tenaga Nasional stock chart Source: https://www.tradingview.com/x/obPxPhiI/ TENAGA NASIONAL Utilities / Electric Utilities & IPPs / Electric Utilities Target Price: 9.30 (MYR) High limit: 9.24 (MYR) Stop Loss: 8.00 (MYR)
2.2.2 VOLUME ANALYSIS Volume measures the number of shares traded in a stock and indicate market strength. A green volume bar means that the stock closed higher on that day verses the previous day's close. and a red volume bar means that the stock closed lower on that day compared to the previous day's close. Based on Figure 2, the highest green volume bar is dated on 18 March amounted to 45.901M traded shares or 5.236M average in the last 50 days with the closing price of RM10.195, higher than the day before which was RM10.110. The highest red volume bar in the other hand is dated on 17 September amounted to 14.834M traded shares or 3.107M average in the last 50 days with the closing price of RM9.890 which is lower than the day before which was RM9.960. 2.1.4 PRICE PATTERN (SYMMETRICAL TRIANGLE) Price pattern is a recognizable configuration of price movement that is identified using a series of trendlines and/or curves. Based on Figure 2, I am able to identify a pattern known as the symmetrical triangle pattern and it formed starting from the month of February and ended it June followed by a downward trend because it ended in the diminishing support level. In order for traders to decide whether they should make a buying or selling decision, they will wait until the trend exits the triangle area. In most cases, if the price breakout is on the diminishing resistance area, the price will go upwards and traders will make they selling decision and vice versa. 2.1.3 CANDLESTICK (BULLISH ENGULFING) Candlestick is used to provide valuable insight into the dynamics of the market and the battle between buyers and sellers and are often used to confirm a trade setup based on other technical tools. Based on Figure 2, I have identified three bullish engulfing candlestick pattern dated on 28 January, 21 April and 28 June. Bearish engulfing patterns occurs at the end of a downtrend where it signifies a lowest price and usually followed by an uptrend. Whenever a bullish engulfing candlestick is identified, investors usually will make a buying decision as they expect the price to go upward. This candlestick can be identified if the first candle has a small red body and followed by a longer green candle that covers the red candle. Engulfing patterns are most useful following a clean downward price move as the pattern clearly shows the shift in momentum to the upside. Bullish engulfing candlestick that is spotted at the end of June is also expected for the price to increase.
2.2 TECHNICAL AND MOMENTUM INDICATORS 2.2.1 SIMPLE MOVING AVERAGES Simple moving average is an indicator used to confirm the trend that already happened and cannot be used as indicator to predict future prices. 2.2.1.1 SHORT TERM (20 DAYS) 20 day moving average is used to identify moving average in a short-term period. When price breaks above an upwardly sloping moving average, this will give out a buying signal. Another buying signal is a support bounce where the moving average acts as a support level for the price movement. However based on the chart above, no identification of support bounce moving average but I was able to identify few buying and selling signals as plotted in chart. 2.2.1.2 LONG TERM (50 DAYS) 50 day moving average is used to identify moving average in a longer time period. It has similar characteristic with MA 20, however MA 50 has much smoother line. Traders usually prefer 50 MA or larger because long term MA usually does not have much whipsaws which is a buying and selling signal that is too close between each other. Based on the chart above, I managed to spot few resistance bounce where the MA acts as a resistance level for the price movement.
Bollinger band is one of the technical indicator that can help to identify trends and measure the volatility of security. Based on the above chart, the Bollinger band is set with a 50 day moving average. A potential entry point or buying signal can be identified when the price of security below the band. As the chart above from Tenaga Berhad, the first buying signal is identified in the month of July. Investors usually wait until the price goes back into the band before entering the trade. When the price hits the moving average, some investors will use this as an exit point or selling signal. Besides plotting the exit point on the moving average line, some also targets the upper band as their exit point. In between those two exit points, exiting or selling in the upper band will yield more profit for the investor but it can take longer to achieve. When exiting based on the upper band, trader usually wait for the price to falls back into the band to finally exit the trade. At the end of the chart, the price is basically following the lower band. This indicates a downward trend and investors usually will not making any entry or buying decisions because it is believed at this point, the price will continue to fall. 2.2.2 BOLLINGER BANDS (50) 2.2.2 MOVING AVERAGE CONVERGENCE DIVERGENCE (MACD) MACD is a type of momentum indicator that measured the relationship between two moving averages. The blue line indicator is the MACD line while the red line indicator is the signal line. Buying signal can be identified when the MACD line crosses above the signal line, MACD is above the zero line or when the MACD histogram turns up below zero while selling signal can be identified when the MACD line crosses below the signal line, below the zero line or when the histogram turns down above zero. MACD indicator is best used during trending prices because it will whipsaw if used in volatile market. The frequent crossover between the signal and MACD line will increase the portfolio volatility and might result to losses. At the end of this graph, you can see that both lines are almost intercepting which this could give traders a preparation signal to buy the stock once it interscepts.
3.0 PRICE FORECAST From what we can evaluate from Figure 1 and the following charts earlier, the price movement pattern is plausible in terms of a downturn, as the graph shows bigger losses from the beginning of January and got worst at the end of June 2022. The overall trend of Tenaga Bhd's stock prices for fiscal years 2021-2022 displays a decline pattern. It is because the price is reduced from the start of the year, which is January 2021, to the end of the fiscal year, which is December 2021. There were also a sideways pattern from October 2022 to June 2022. The month of June 2022 was the hardest as price falls the lowest compared to previous prices. However, there is a bullish engulfing candlestick spotted at the end of the chart. Usually when there is a bullish engulfing candlestick, prices are expected to increase. Nonetheless, stock prices might go against us and based on my observation using the three indicators above, I truly think it is not a good stock to trade in the short term or at the moment as the prices are going really bad and most of the indicators are giving out a selling signal which means the performance of Tenaga Bhd stock is currently doing really bad.
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