YTLpower oh YTLpower

Different research house:

From Maybank:

What’s Our View

There remains no clarity on the corporate action front. In particular, there is no certainty that YTLP would repeat a 10sen DPS in FY15. Also, the company has not done major share buybacks in FY15 to-date. Recall YTLP’s investment thesis and share price performance in recent years have largely revolved around corporate actions.
Our earnings forecasts are unchanged. Our TP of MYR1.65 is based on a 10% discount to our RNAV estimate of MYR1.84 (fully diluted basis), which is in turn derived from a sum-of-parts, with each operating entity valued using DCF.
Source: Maybank Research - 13 Feb 2015



  • Maintained Sell with higher target price of RM1.50 (from RM1.44) based on 10% discount to Sum-of-Parts. We expect earnings to remain depressed in the near term, due to potentially lower margins for Singapore Seraya and UK Wessex Water, with continued earnings uncertainty from YTLC as well as concession expiry of domestic power generation.
Source: Hong Leong Investment Bank Research - 13 Feb 2015


Key Results Highlights  Despite topline declining 10%, the 2Q15 net profit inched up 1% QoQ to RM245.1m from RM243.8m. This was mainly helped by the recovery of PowerSeraya earnings and better Wessex Water results. In fact, PowerSeraya managed to post 24% QoQ growth in PBT despite revenue dipping 12% while Wessex Water posted a 17% rise in PBT while turnover remained flattish. Meanwhile, local IPPs registered 43% decline in revenue as a result of TENAGA’s rescheduling of generation program, resulting in pre-tax profit contracting 22%. On the flipside, pre-tax loss for YES narrowed to RM50.0m from RM77.9m as revenue surged 38%.
 YoY, the 2Q15 net profit dipped 1% from RM247.0m while revenue contracted 19%. The substantial decline in topline was mainly driven by: (i) lower electricity units sold at PowerSeraya, and (ii) the lower revenue from the local IPPs as stated above. However, the lower decline in bottom-line was helped by: (i) 18% rise in Wessex Water earnings on tariff hike, (ii) there was no provision in local IPPs, and (iii) higher earnings investment arising from higher dividend received, interest income and associate incomes. Similarly, the 1H15 earnings inched up 1% while revenue declined by 17% compared to 1H14.
Outlook  Although the strong SGD should benefit YTLPOWR, the electricity market in Singapore remains competitive with new capacity coming onstream. While the PPAs for local IPPs are expected to expire soon, earnings prospect for YES is set to be better judging from its growing subscriber base. For Wessex Water, earnings are expected to be fairly flattish until it gets the next tariff revision.
Change to Forecasts  We trim FY15-FY16E earnings by 6%-8% as we lowered PowerSeraya earnings assumption but this is mitigated by higher Wessex Water earnings assumption
Rating Maintain MARKET PERFORM Valuation  Our new RNAV/share is RM1.87 from RM1.89 after adjusting for PowerSeraya and Wessex Water earnings. With an unchanged 10% discount to its RNAV, our new price target is RM1.68 from RM1.70 previously.
Risks to Our Call  Lower dividend payouts, widening YES’ losses and the rise in global economic risks, especially in Europe. 
Source: Kenanga


YTL  Power’s  (YTLP)  1HFY15  (Jun)  results  met  expectations.  We maintain our NEUTRAL call, earnings forecasts and TP of MYR1.69 (4% upside).  In our opinion  YTLP  currently lacks catalysts  as it has yet to secure  a  new  power  plant  project  in  Malaysia,  while  its  existing concessions  are  near  expiry.  Not  helping  the  sentiment  on  the  stock were  weak  performances  from  PowerSeraya  in  Singapore  and sustained losses at its WiMAX unit.
A mixed bag. YTLP’s 1HFY15 core net profit of MYR478.2m (excluding forex gains) came  broadl in line with expectations at 55%/47%  of our full-year  forecast/consensus  estimates  respectively.  1HFY15  core  net profit  declined  16.2%  YoY  on  the  back  of  weaker  contribution  from PowerSeraya in Singapore (due to increased competition on expanded capacity  in  the  power  generation  sector  in  Singapore)  and  widened losses  at  its  WiMAX  division.  There  was  a  slight  improvement  in performance  from  its  power  generation  business  in  Malaysia  and Wessex Water in the UK.
Still  no  new  local  power  plant.  We  are  mindful  of  the  high execution/construction  risk  of  greenfield  power  plant  projects  YTLP  is pursuing in India and the Middle East  as they are prone  to delays  and hence  resulting  in  potential  cost  overruns.  We  believe  as  far  as  YTL Power is concerned, “home is where the re-rating catalyst is”. However, a  new  power  plant  project  in  Malaysia  has  thus  far  remained  elusive. There is a possibility that one of YTLP’s power plants (retiring in Sep2015) may be renewed for 1-2 years due to  delays in the completion ofa  competitor’s  1000MW  coal-fired  power  plant.  However,  even  if  this happens, the impact on earnings is likely to be one-off.
Forecasts. We maintain our earnings forecasts.
Risks:  i)  Continued  losses  from  its  WiMAX  division,  and  ii)  earnings volatility at PowerSeraya.
Maintain  NEUTRAL.  YTLP  is  unappealing  currently  as  it  has  yet  to secure  any  new  power  plant  project  in  Malaysia,  while  its  existing concessions  are  near expiry. Also, the market is unlikely to get excited over its participation in overseas greenfield power plant projects given the high  execution  risk. We  keep  our  SOP-based  TP  at  MYR1.69  (see Figure 2).