Tenaga Nasional: A Safe Utility, But Is It a Good Investment?

TNB has delivered exactly what Malaysia expects from its dominant electricity provider. Over the past decade, it delivered reliable power, steady cash flow, and a balance sheet that rarely causes concern. Yet for long-term investors, the more important question is not whether TNB is stable - but whether it is compounding value.

From 2018 to 2024, TNB operated through fuel-price shocks, regulatory pass-throughs, Covid disruptions, and the early stages of the energy transition. On the surface, revenues grew and profits rebounded sharply in 2024.

Dig deeper, however, and a more constrained picture emerges. Underlying electricity demand expanded slowly, margins weakened, and returns on capital consistently trailed the cost of capital. In other words, TNB remained financially sound - but economically capped.

At the same time, the Group has laid out ambitious plans: grid modernisation, renewable expansion, and a growing international footprint. These initiatives offer long-term optionality, but they also raise a critical investor question - can a mature, regulated utility transform its business mix fast enough to improve returns, or will growth simply absorb capital without creating value?

TNB is stable, cash-generative, and balance-sheet strong. But it has yet to demonstrate the economics of a true compounder. Delivering on its ambitions will determine whether it becomes one.