Journey to Wealth

YTL Power - 1Q13 within, but dividends disappoints

kiasutrader
Publish date: Fri, 23 Nov 2012, 09:32 AM
kiasutrader
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Period   1Q13

Actual vs. Expectations  1Q13 net profit of RM253m was within expectations, making up 20% each of our and street's forecast. 

Dividends  1Q13 interim tax exempt dividend of 0.9375sen (-50% YoY; 0% QoQ), which only made up 15% of our FY12E NDPS of 6.30sen. 

Key Results Highlights    YoY, 1Q13 net profit achieved flattish growth of 3% although topline grew 15%. Revenue was boosted by Bestarinet (YES), improved tariffs for Wessex and Seraya's higher sales volumes. However, this was negated by; 1) Malaysian IPP's PBT declining 41% to RM51m due to scheduled maintenance; 2) investment PBT still fell by 70% albeit the higher associates' contributions due to significantly lower dividend income; 3) Seraya's higher fuel cost; 4) Wessex's impacted by higher operating costs and depreciation. 

QoQ, 1Q13 net profit fell 38% whilst revenue remained flat, because of last quarter's one-off gain on de-recognition of financial assets and Wessex enjoying lower UK corporate tax of 2%. Positively, YES pretax losses have narrowed to RM61m from 4Q12's RM95m due to Bestarinet. We do expect 'breakeven' after FY14E. 

Outlook    Record cash pile of RM10.0b but dividends are historically weak. As highlighted earlier, we strongly believe the group is conserving cash for more M&A opportunities, which could give rise to good bargains given global economic uncertainty.

Change to Forecasts    No changes to FY13-14E earnings. However, we reduce FY13-14E NDPS by 16% to 5.3sen (3.5% yield) each. We strongly believe the group will try to match dividend yields to its cost of funds (current effective rates are 3.5%). 

Rating     Maintain MARKET PERFORM
Although dividend yields are unappealing, the stock is trading at trough levels of FY13-14E PBV of 1.1x-1.0x and PER of 8.7x-8.5x. 

Valuation      Lower TP to RM1.51 (RM1.80 previously) based on an unchanged target FY13E net yield of 3.5% and lowered FY13E NDPS of 5.3sen. 

Risks     Lower dividend payout. YES losses continue to widen. Global economic risks, especially Europe.

Source: Kenanga 
YTLPOWR (6742)
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Discussions
Be the first to like this. Showing 5 of 5 comments

lotsofmoney

Francis Yeo is a christian. It is obvious that he does not apply christian principle to his business. This is what we call a pseudo christian. Pls prove me wrong.

2012-11-23 14:04

cephas

Just wondering, why do you say that he isn't practising christian principles to his business?

2012-11-29 21:07

Sarjit Singh

he is sucking our money!!!!!!!never think about the feeling of investor....i believe in karma....especially those who self-proclaimed religious

2012-12-18 21:34

tc2012

if u can't afford to lose money stay out of share market full stop

2012-12-18 22:10

Eric29

How a big n profitable company give just a sen of dividend,mediac better than them can

2012-12-19 08:59

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