TENAGA - Personal Reactions

Came across this old article - over 2 weeks old in fact.

As an independent investor, how should you read this?

 Here's my instant reactions.

1. Interesting.  AI and Data Centre should boom longer term and requires more energy, but how much?
• (that question requires more reading.  700MW this year, 5,000 MW by 2035 means what % compared to TENAGA's total sales and net profit after spending and investments?).
2. yingxian@wsj.com.   Same name again.  Just noting the wsj (foreign) exposure.

And here's the funny reaction that caused me to laugh!  

Appreciate it's a summary, I probably shouldn't laugh, but if one makes an argument about its long term business prospects that stretched up to 2035 (11 years from now) then:

1. Why such a low price target of RM12.80 (just RM1.40 or a bit more than 10% upside)?
2. If this is a macro trend to long term profitability, why not supplement with a higher longer term target?

For example, since we are now talking till 2035 (macro), let's talk over a shorter period and use Technical Analysis.   

1. See that uptrend line since 30 years ago?
2. Imagine a channel parallel to this and connecting the peaks.
3. Where do you think TENAGA is right now?  In the middle of that channel?
4. Why not just paint a picture that TENAGA could get to the peak of that channel, somewhere over the next 3-7 years, hitting RM18-22 say?  Much higher target over much shorter period.

I think it's not impossible scenario over next 3-7 years.

1. Over this period, markets are likely to crash and go into a strong bull market.
2. This type of stock, barring political and other non-market interventions, is a great one.
3. I agree with the Affin Hwang analyst that AI and Data Centres will consume greater electricity over time.  This is a macro trend coming from big data crunching and exponentially increasing related apps.  However it's also important to "contextualize" this, because there are so many other demands for electricity and there will be future efficiencies too.  

Summary and Conclusion

RM12.80 target is amusing.

• If want to predict long term, then, I will say something like: Next 3-7 years target is around RM18-RM22!

On more serious note:

• Lower price remains accumulation.
• Exceeding the top of that channel is obviously a selling zone.
• I will definitely sell earlier if I find better stocks to rotate into when price is high.

Don't take this prediction too seriously!

Stay amused, keep reading widely.

Good luck!