Tenaga Nasional Bhd (TNB) delivered broadly in-line 1Q26 results, with most research houses maintaining ‘Buy’ call for its counter, highlighting resilient earnings growth supported by stronger electricity demand, improving operational efficiency and an expanding regulated asset base, even as higher effective tax rates and sequential softness weighed on quarterly performance.
According to Hong Leong Investment Bank Bhd (HLIB Research), TNB’s core earnings rose 10.1% year-on-year (YoY) to RM1.2 billion, driven by stronger electricity demand and improved operations, although quarterly profit declined 10.2% due to tax normalisation.
HLIB Research noted that demand in Peninsular Malaysia rose 7% in 1Q26, led by a 13% jump in the commercial segment, largely driven by data centre consumption and business activity, partially offset by weaker industrial demand from metal and cement players.
The house maintained its ‘Buy’ call with a higher target price (TP) of RM18.15, citing improving long-term returns supported by the newly finalised contingent capex framework.
CIMB Securities Sdn Bhd, meanwhile, highlighted that TNB’s 1Q26 core earnings per share rose 5% YoY but fell 21% quarter-on-quarter, reflecting lower non-fuel operating costs offset by a higher effective tax rate following the utilisation of investment allowance in the prior quarter. CIMB noted that regulated capex utilisation declined 12% YoY to RM2.47 billion, though the regulated asset base expanded 9% to RM76.9 billion.
As such, the research house kept its ‘Buy’ rating with an unchanged TP of RM15.90, pending further guidance, and pointed to stronger earnings momentum ahead driven by RAB growth and improving GenCo performance.
MBSB Investment Bank Bhd (MBSB Research) said TNB’s 1Q26 core earnings of RM1.08 billion were within expectations, underpinned by a 7% increase in electricity demand led by the commercial segment. It noted that revenue rose 6.6% YoY to RM17.1 billion, supported by a favourable Automatic Fuel Adjustment position, while GenCo earnings surged significantly due to improved plant performance.
MBSB Research too retained its ‘Buy’ recommendation with a TP of RM16.40, highlighting stable tariff framework under RP4 and resilient demand growth of about 5.4% expected in CY26.
Lastly, RHB Investment Bank Bhd (RHB Research) also maintained a positive stance, calling TNB its sector “Top Pick” with a TP of RM16.50. It said the utility’s giant 1Q26 recurring earnings met expectations, driven by a 7% increase in electricity sales, particularly from data centre-related commercial demand. RHB Research noted that the effective tax rate rose to around 31% in the quarter but is expected to moderate going forward, while regulated capex deployment remains on track at RM2.5 billion in 1Q26.
Across the board, analysts highlighted that TNB’s outlook remains anchored by sustained electricity demand growth, particularly from data centres, alongside rising regulated asset base contributions and clearer visibility from the contingent capex return mechanism.
While near-term volatility stems from tax fluctuations and capex timing, the research houses broadly see FY26-FY28 earnings growth supported by structural demand and regulatory tailwinds.
