Too many Tenaga bears in the forest

From the Star:

The mere speculation of purchasing the power assets under 1Malaysia Development Bhd (1MDB) had caused Tenaga Nasional Bhd (TNB) to lose some RM6bil in value over the last six trading days.

On the back of poor sentiment affecting the stock market, TNB’s shares had lost RM1.06 since May 18, largely due to the dominant electricity provider being touted as one of the possible purchasers of 1MDB’s power generation assets.

The counter continued its losing streak yesterday, shedding 46 sen, or 3.36%, to close at RM13.24 – its lowest since mid-December 2014 and off its intra-day low of RM12.98 yesterday – and erased 3.36 points off the benchmark FTSE Bursa Malaysia KL Composite Index.

Last week, TNB president and chief executive officer Datuk Seri Azman Mohd had said that the company would not pay a premium for 1MDB’s power assets. But it had not stopped the market from viewing the possible deal negatively.

Tenaga might be shaping up to be the best trade of the year.

They've been beaten down as the market has caught whiff they will may take over 1MDB's power plant venture.  I think this is not an issue.  I actually mentioned it here first in a previous post before it became big in The Star.  For one, I'd rather they take over the plant venture or else, they will likely not enjoy the very lenient tariff structure that has produced outsized profits.

At any rate, I'm probably just waiting for the news to be baked into the market.  If they do take it over, they could probably just list the company and recoup their money back.  This will probably tie up massive amounts of money.  I doubt Tenaga will be hurting.  with the billions of profits every quarter.  They could probably pay for the entire 1MDB plant in just 1-2 years of earnings.  I'm just waiting to get more clarity on if 1MDB didn't screw up the power plants finances and if it has cost overruns.

Malaysia needs the power assets.  We've got such a huge population from foreign workers, the current infrastructure is insufficient.