Tenaga: A Decade of Stability, Slow Growth, and Transition

Value Investing Case Study 114-1: A fundamental analysis of Tenaga Nasional Bhd, evaluating its growth, profitability, and value creation.  

If you think Tenaga Nasional Berhad (TNB) is simply a slow-moving utility giant, think again. Beneath its steady exterior lies a decade-long story of quiet transformation and hidden structural limits.

Over the past seven years, TNB has modernised its grid, dipped into renewables, and taken early steps into international markets. Yet Malaysia still accounts for 97% of revenue, and electricity demand has grown at only 2.4% annually - barely enough to nudge long-term earnings.

Yes, revenue rose at a 4.6% CAGR, but the swings tell a deeper story. The biggest spikes did not come from demand or pricing power - they came from fuel-cost pass-through distortions, not actual business momentum. Strip those out, and TNB’s profitability still looks structurally capped.

Margins tell the same tale. Contribution and gross margins dipped meaningfully from 2018 to 2021 and have only partially recovered. This suggests that the “recovery” is more normalization than acceleration.

What is even more striking is return on capital. TNB’s ROIC has averaged below its cost of capital, meaning the company’s core operations have not created economic value for shareholders over the past decade. 

Against peers across Asia-Pacific, TNB holds one of the strongest balance sheets - but ranks among the weakest in profitability trends and returns. Yet there is a twist: free cash flow has quietly become a strength, improving consistently and outpacing most peers by 2024.

So, is TNB a stable compounder or a value trap in disguise?

👉 To read the full analysis—including the valuation, intrinsic value estimate, margin-of-safety insights, and investment conclusion—unlock the password-protected report.

👉 Subscribers only. Click here and enter your access password. New here? Sign up to receive your free access password.

This blog is reader-supported. When you buy through links in the post, the blog will earn a small commission. The payment comes from the retailer and not from you. Learn more.

END

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 

How to be an Authoritative Source, Share This Post

If the above article was useful, you can find more insights on how to make money in my e-book. The e-book is now available from Amazon, Kobo and Google Play. PS: If you are in Malaysia or Singapore, the e-book can only be download from Kobo and Google Play.

If the above article was useful, you can find more insights on how to make money in my e-book. The e-book is now available from Amazon, Kobo and Google Play.

PS: If you are in Malaysia or Singapore, the e-book can only be download from Kobo and Google Play. 

Disclaimer & Disclosure

I am not an investment adviser, security analyst, or stockbroker.  The contents are meant for educational purposes and should not be taken as any recommendation to purchase or dispose of shares in the featured companies.   Investments or strategies mentioned on this website may not be suitable for you and you should have your own independent decision regarding them. 

The opinions expressed here are based on information I consider reliable but I do not warrant its completeness or accuracy and should not be relied on as such. 

I may have equity interests in some of the companies featured.

This blog is reader-supported. When you buy through links in the post, the blog will earn a small commission. The payment comes from the retailer and not from you.

Your link text