Tenaga Nasional Bhd (TNB) has pledged to absorb between RM120 million and RM150 million in fuel surcharge costs following the Malaysian government’s recent expansion of electricity bill protections. The government raised the exemption threshold for the automatic fuel adjustment (AFA) and retail charges for domestic consumers from 600 kWh to 800 kWh, effective from September through December 2026.
Market analysts have expressed cautious views regarding the impact of this move on TNB’s financial performance. CIMB Research adjusted its forecast for TNB’s core net profit (CNP) in the financial year 2026 (FY26), lowering it by about 2% to accommodate the additional costs incurred from absorbing the expanded AFA and retail charges. However, the firm maintained its profit estimates for FY27 and FY28, suggesting that the immediate financial effect is contained.
Despite the relatively small short-term earnings hit, CIMB Research highlighted concerns that if fuel prices remain high beyond 2026 and the government continues to broaden AFA exemptions, TNB could face prolonged subsidy burdens. This possibility, the firm warned, might undermine investor confidence in TNB’s regulated returns framework under the Incentive-Based Regulation (IBR) system. CIMB kept a “buy” rating on TNB with an unchanged target price of RM15.90 per share.
Similarly, CGS International (CGSI) Research described TNB’s absorption of fuel surcharge costs as a manageable, likely one-off strain that may reduce FY26 earnings per share by around 3%, primarily in the last quarter. The research house noted that historically, the core pass-through mechanism for fuel costs under the IBR remains intact, and the current measures appear to serve as temporary consumer relief.
CGSI also observed that a RM3.5 billion decline in TNB’s market capitalization in the days preceding the government’s announcement on September 17 indicates the market’s sensitivity to regulatory risks extending beyond the modest earnings impact. However, it reiterated confidence in TNB as a key vehicle for investors seeking exposure to Malaysia’s energy transition and power sector growth. Planned capital expenditures in transition and distribution assets, improved performance in TNB GenCo, and opportunities in new combined cycle gas turbine and renewable energy projects are expected to drive a re-rating. CGSI retained an “add” rating with a target price of RM16.60, viewing the recent share price dip as an attractive entry point.
RHB Research also saw TNB’s shares as oversold, noting a 12% decline from recent highs. It encouraged accumulation on price weakness, forecasting stronger earnings in the latter half of FY26. The firm estimated that the additional cost impact would only reduce FY26 earnings forecasts by 2% to 3%, signalling minimal disruption.
TA Research, meanwhile, downgraded its FY26 net profit estimates by 2.5% to factor in the upper range of the surcharge absorption cost.
Overall, while TNB’s decision to shoulder these additional charges may temper near-term profitability, analysts generally view it within the context of broader regulatory frameworks and as part of the company’s corporate social responsibility efforts to alleviate consumer electricity costs amid rising fuel prices.