Issuer Flash: Tenaga Nasional Berhad

Report date: 2026-05-29 Event date: 2026-05-25 Event title: 1QFY2026 Results

1. Flash Conclusion

Tenaga Nasional Berhad's (TNB) 1QFY2026 results do not change the credit view in the current summary. The results confirm that, as a core regulated electric utility, TNB's credit profile continues to be supported by demand growth, the RP4 tariff framework, a reduction in regulatory-related receivables, and capital market access. Revenue increased 6.6% year on year to RM17.10bn, EBITDA rose 6.5% to RM5.52bn, and company-reported core profit increased 6.5% to RM1.24bn.

However, for bond investors, the interpretation should not simply be that earnings growth is reassuring. To capture demand growth, TNB will need to continue investing in grid reinforcement, generation, renewable energy, and data centre connections. Capex in 1QFY2026 was approximately RM3.3bn, with full-year 2026 guidance of approximately RM18bn, while total debt increased from RM59.1bn at end-2025 to RM60.5bn. The improvement in net debt is positive, but given refinancing needs and the investment burden, it is not yet appropriate to view this as a permanent reduction in leverage.

In conclusion, the results are a positive confirmation of TNB's credit profile. However, the view set out in the current summary is maintained: TNB remains a strong utility credit with support incorporated, but AFA cash conversion, capex recovery, refinancing, and legal protection at the individual bond level require continued monitoring.

2. Published Information

On 25 May 2026, TNB published its unaudited results for 1QFY2026, the quarter ended 31 March 2026. The company stated that performance was supported by higher electricity sales, commercial-sector demand, and the RP4 tariff framework.

Group electricity sales volume was 35,509.6GWh, up 6.2% year on year. Of this, TNB's own sales volume was 33,709.7GWh, up 7.0% year on year. Within TNB, the commercial segment increased 13.0% to 13,170GWh and the residential segment increased 9.7% to 9,405GWh, while the industrial segment declined 2.1% to 9,508GWh. Growth in the commercial segment was mainly driven by data centres, retail, and business services.

Profit and loss showed steady improvement, but the increase in profit before tax was smaller than the increase in EBITDA. The effects of depreciation, lower finance income, finance costs, and tax expense remained, and it is still the case that profit growth does not translate directly into a thicker layer of surplus cash.

3. Credit Interpretation

First, demand growth is positive for credit quality. For TNB as a regulated utility, demand growth provides the foundation for revenue, regulated assets, and capex recovery. The company has also raised its 2026 demand growth outlook to a range of 4.5%-5.5%. However, data centre demand involves large-scale connections and transmission and distribution network development, so revenue growth and front-loaded investment need to be assessed together.

Second, the way AFA and RP4 are functioning became somewhat more reassuring in these results. Regulatory-related receivables declined from RM1.9bn at end-2025 to RM0.7bn, while trade receivables also declined year on year. The company indicated receipt of ICPT payments and improved collection efficiency under the AFA framework. However, 1QFY2026 also benefited significantly from lower fuel prices, and AFA cash conversion under a stress scenario remains untested.

Third, the funding profile is strong, but funding needs are also substantial. TNB established a RM10.0bn Islamic medium-term note programme for regulated capex, while TNB Genco and TNB Renewables also issued sukuk. Capital market access is evident, but the structure remains dependent on external funding.

Overall, the results reinforce the credit view in the current summary in a more stable direction. Near-term deterioration risk has not increased, but the results are more a confirmation of the existing view than a basis for raising the credit assessment.

4. Key Figures

5. Items to Check Next

The main focus for the next review is whether AFA cash conversion continues even in a rising fuel cost environment. 1QFY2026 benefited from lower fuel prices and was not a quarter that tested the resilience of the framework. In the next results, AFA/ICPT over- or under-recovery, regulatory-related receivables, trade receivables, contract assets, operating cash flow, and short-term borrowings should be reviewed together.

Capex and funding also require continued monitoring. Items to confirm include the scope recognised as regulated assets, timing of inclusion in RAB, allowed returns, the debt maturity profile after sukuk issuance, and management of maturities in 2026 and 2028.

Unused committed lines, the breakdown of short-term debt, hedging of foreign-currency debt, and guarantees, security, and covenants for individual bonds could not be sufficiently confirmed from the official presentation materials this time. The only pending item resolved this time is the official publication of FY2026 first-quarter results.

6. Sources

1. Tenaga Nasional Berhad, "Financial Unaudited Results - 1QFY2026", 25 May 2026. Confirmed the results publication date, unaudited quarterly results, and key profit and loss indicators.
   https://www.tnb.com.my/assets/quarterly_results/Financial_Unaudited_Results_-_1QFY2026.pdf

2. Tenaga Nasional Berhad, "Analyst Briefing - 1QFY2026", 26 May 2026. Confirmed demand, segment-level electricity sales volumes, AFA/ICPT, regulatory-related receivables, capex, debt, and funding.
   https://www.tnb.com.my/assets/quarterly_results/Analyst_Briefing_-_1QFY2026.pdf

3. Tenaga Nasional Berhad, "TNB Remains Resilient, Focuses On Stable Supply And Value For The Rakyat", 25 May 2026. Confirmed management comments, demand outlook, and the explanation of electricity supply and infrastructure investment.
   https://www.tnb.com.my/announcements/tnb-remains-resilient-focuses-on-stable-supply-and-value-for-the-rakyat