https://themalaysianreserve.com/2017/06/22/ekovest-gets-go-ahead-kl-river-city/

The River of Life project has been given to Ekovest-MRCB since 2017, and it has nothing to do with YTL now.

Another good closing today.

Congras to those who bought in low below RM4.80 at end of May 24 after the weak Q3 result or during the unfounded selldown last Monday-Tuesday.

@Aero1, yes I also read somewhere showing that EPF had made a batch of buyback in YTL Power shares, but cannot confirm that as there is no Bursa announcement when EPF's stake is less than 5%

Yes I agree with you there have been many different foreign funds buying into YTL Power in the past few months, a lot of them are private equity funds. But there are also some short term foreign funds who have taken profit, it is good that these hot money has exited the stock and their selling has been well absorbed by other longer term foreign funds and local funds.

I have received requests for more information from a couple of funds based in Hong Kong to which I just shared my own analysis and view on the company earnings outlook.

@Aero1, can share the latest data of foreign funds holdings in YTL Power?

If you have data for local funds holdings, it would be good to know too.

Statistics shows that local funds are buying big into YTL Power in past few days, driving the share price up to RM5.30, and the local fund buying has over-whelmed selling by foreign funds and some local retailers.

This is a reverse of the situation in Jan-Mar 2024. Perhaps local funds know something the foreign funds and us local retailers don't know yet. I see some good news coming, or local funds are fully convinced of YTLPower strong earnings growth in next few years.

After IOICB and Shenton House are injected 50% into a Singapore REIT, IOIPG's total debts will reduce by RM4.5b from RM18.9b to RM14.4b.

At average interest rate of 4-5%, IOIPG will save interest expenses of RM200 million a year, which will increase net profit of the Group.

Hence on that basis, I see this SHenton House proposal as a blessing in disguise as it will help:
1) to pressurize IOIPG management to accelerate the asset monetisation exercise such as injection of IOICB or Malaysian assets into a REIT or dispose of some parcels of land in Kulai to data centre developers. IOIPG management already stated that they could do the REIT listing within 12-18 months, which is just right before Shenton House construction will start at end of 2025.

2) Shenton House is the last major redevelopment site in Singapore CBD, by having IOIPG to take over this project, it will avoid competition and enable IOIPG to have a more orderly roll out of commercial products in the CBD area or cross selling/ marketing with its IOICB and Marina View Residences

3) With the asset monetisation exercises discussed above, setting up a REIT in Singapore to hold 50% of IOICB and Shenton House will reduce group net gearing ratio from 0.74x to 0.50x and reduce total debts by RM4.5b and save interest expenses by RM200 million a year. So after such exercise, IOIPG's group earnings will expand by at least RM200 million, before we add in any accretive earnings from leasing out the redeveloped Shenton House.

The management clarified that IOIPG had a total debt of RM18.9b, out of which RM10.5b (SGD3.0b) was sitting at IOICB, RM4.8b at Marina View Residences, RM2.0b in Malaysia and RM1.5b in China.

The SGD3.0b borrowings at IOICB has floating interest rates which were at 1% at the time of acquisition and now at 4-5% p.a.

Assuming IOICB is injected into a REIT at valuation of SGD4.0b, IOIPG would book in a gain of SGD600m or RM2.1 billion which would increase shareholders' funds from RM22.7b to RM24.8b.

IOIPG would raise cash proceeds of SGD2.0 billion by injecting 50% stakes into a REIT. The management estimated that the total project costs for redeveloping Shenton House would be about SGD1.5 billion, hence if IOIPG were to take over this project, it would need to set aside SGD1.5b from the SGD2.0b cash proceeds. After this, it would still have SGD500m left to pare down net debt. Total debt would come down from RM18.9b by SGD500m or RM1.75b to RM17.15b.

Net gearing ratio would come down from (18.9-2.1)/22.7 = 0.74x to (17.15 - 2.1)/24.8 = 0.61x.

Using the same valuation as IOICB, the Shenton House when fully redeveloped will be worth SGD1.55bn minimum. Assuming Shenton House is injected into the same REIT in Singapore, it would raise another SGD775 million of cash proceeds to IOIPG. Then IOIPG net gearing ratio will fall further to 0.50x, which will be comparable to other big cap property companies'.

In their reply on how to fund the acquisition of Shenton House project, IOIPG management replied that they were considering setting up a REIT for some of its investment properties in Malaysia and Singapore.

They commented that IOI Central Boulevard is worth minimum SGD4.0 billion vs book value of SGD3.4b. If they sell 50% stakes into a REIT, IOIPG could raise cash of SGD2.0 billion minimum, which would be more than enough to fund the acquisition of Shenton House.

On the Malaysia side, the investment properties have a combined value of RM6.5 billion, if injecting 50% into a REIT, it would raise cash of RM3.25 billion which would still slightly be not enough to fund SHenton House.

Thanks @sg999. The notes are very informative.

To the last question on whether there is any land available for quick monetisation to data centre players, IOIPG management could have taken a cautious stand and conservative approach as the bulk of its landbank in Johor has been earmarked for township development.

I think right now the management does not have any plan to sell any land in Johor for quick monetisation, but I believe when opportunities arise especially when the offer price is good above RM75 psf, I am sure the management will consider it.

Just like last September, IOIPG suddenly announced to sell off 403 acres of its land in Kulai to Eco World while they did not have any plan to sell any land back in 2023. Just that at that time the data centre boom in Johor has not yet appeared, so the land was sold at cheap.

I have downloaded the UOB research report on IOIPG dated 28 June 2024. The report mainly talked about the proposal Shenton 101 project injection into IOIPG. UOB analyst is neutral on the Shenton proposal, citing that this project would raise IOIPG gearing to about 0.89x but this Shenton 101 is the last major development opportunity in Singapore prime CBD area and would be good for IOIPG to improve its recurring income in Singapore in the long run.

The analyst further comments that for this proposal to get approved, it will need 50% of the minority shareholders to approve it as Lee CEO cannot vote. And this Shenton HOuse proposal may be a blessing in disguise as minority shareholders can pressure the management and CEO to accelerate its plan to convert its investment properties into a REIT to reduce gearing and unlock value of its assets.

Furthermore, the analyst foresees that when IOI Central Boulevard is completed by September 2024, IOIPG may get revalue the asset, and with the market value of S$3.87 billion to S$5.16 billion vs book value of S$3.4b, the revaluation gain may be from S$470m (RM1.6 billion) to S$1.76b (RM6.16 billion). Such revaluation gain will increase IOIPG's shareholders' fund and reduce gearing ratio of the group.

I don't see any comment by the management in the report that says that the company does not have any land suitable for sale to data centre operators. Perhaps it was a verbal reply and UOB analyst did not put it into the report.

@sg999, can you please share the management meeting notes with UOB IB? Can share the link here or pm me please?

@sg999, IOIPG has plenty of land available for sale to any potential data centre developers in Johor. IOIPG bought a total of 5,680 acres of land in Kulai many years ago and have since developed some 2,200 acres of it into a mature township over the last 20 years. It still has some 3,480 acres of land in Kulai available for future development.

I think at least 1,480 acres of this is available for quick monetisation if opportunities arise. If you remember, IOIPG sold some 450 acres of such land cheap to Eco World last year before the data centre boom in Johor, and Eco World managed to re-sell some 110 acres of it to a data centre developer at RM75 psf. That shows that the Kulai land owned by IOIPG is worth at least RM75 psf.

FYI, Sunway just announced to sell 64 acres of land in JB for RM130 psf to a Singapore-based data centre operator. Crescendo has sold 3 parcels of land in Pulai at RM125-138 psf.

Yes cwc1981, the proposed MLFF will help to save some RM200 million of operating costs for highway concessionaires every year by doing away the various gantry systems by touch-n-go / Smart Tag / RFID by third parties. And there will be no impact to highway concessionaires in terms of toll collection as MLFF operator will collect the toll and pay back to highway concessionaries in 1 working day, no different from the current payment terms of touch-n-go.

The current resistance to MLFF mainly stems from the existing interest groups who operate the gantry systems who may tend to lose out on the lucrative contracts of over RM800 million a year. I have not seen any valid reason for the objection to MLFF system. Currently highway concessionaires mainly use the excuse that the MLFF operator has no prior experience in toll collection, that is a lame excuse. Did touch-n-go have any prior experience in toll collection before 1999 when it was introduced in highways? Did Smart Tag operator have any experience in toll collection before it was implemented in highways? Nonsense to me.

MLFF is the way forward to go for the country, as can be seen in other more advanced countries like Singapore where it is implemented so efficiently to minimise traffic congestion at toll collection plaza.

@Agjl, YTL Power stock may not be shariah compliant now likely due to its compliance on the debt/equity ratio. Just as some local funds complained of high debts situation at YTL Power last year, foreign funds saw it differently as YTL Power strong earnings rebounds since 2023 would be able to serve the interests well of any additional borrowings. The slightly higher debt/equity ratio is not an issue to foreign funds, and they are correct in the sense that YTL Power gearing is coming down.

You need to look from another angle, now that YTLP stock is not shariah compliant yet its share price has jumped up 7x in a year. When the stock becomes shariah compliant later, more local funds will be able to buy in and the share price will get another round of boosts.

IOIPG is one of the top Buy stocks in TA and AmResearch's big cap picks for 2H 2024. More and more local research houses are calling a buy on IOIPG, when foreign funds are still busy accumulating more shares in IOIPG.

YTD, foreign funds have net bought a total of almost RM300 million of IOIPG shares, while EPF has been buying in millions of shares almost everyday in past few weeks.

https://klse.i3investor.com/web/blog/detail/taresearch/2024-07-02-story-h-157916883-YTL_Power_International_Berhad_Data_Centre_Driven_Growth

TA reiterates Buy on YTL Power with a target price of RM6.25. YTL Power is one of the top Buy stocks in TA's big cap picks for 2H 2024.

I see its target price to be achieved in 2H 2024, and will need to be upgraded early next year.

@bullrun2025, IOIPG chart looks bearish, no doubt. The recent selldown is apparently caused by this RPT proposal, as I have not seen any other news on IOIPG.

How low the share price can go is anybody's guess, I have no clue but see support at RM2.10-2.00. One can slowly accumulate the shares on weakness like now towards the support levels. You can never buy the lowest, but mush have the holding power if the share price dips further after your purchase.

Short term share price movements are hard to explain and to predict, but at the end of the day, fundamentals prevail.

I remember last June when Singapore EMA announced to implement Temporary Price Cap (TPC) on the electricity wholesale market from 1st July 2023, the market took it very negatively and expected this TPC to impact PowerSeraya's earnings severely. As a result, YTL Power share price suffered a knee-jerk reaction of sell down immediately. The share price took a big hit from RM1.30 then to a low of RM1.15, and I kept calling a buy on weakness, as I knew that this TPC would not have a big impact on PowerSeraya's earnings, the bulk of which are secured through long term retails contracts. YTL Power share price recouped all lost ground within a week and scaled new highs within a month.

Now for IOIPG, this Shenton 101 RPT is just a proposal, not a deal. It will not have any impact on IOIPG fundamentals if minority shareholders reject the proposal, therefore I am puzzled with the selldown. This indicated to me that there might have been deliberate market actions to depress the share price for certain agenda unknown to me, or might have been some smaller funds selling as they might thought other funds / EPF and minority shareholders would approve the proposal.

While I do not know how funds and minority shareholders will vote on this proposal, but personally I see positive bias for IOIPG to take over this SHenton 101 project for synergies to be derived from cross selling and lower competition.

My estimate is for YTL Power to achieve net profit of RM850m to RM950m in Q4 FY2024

@Apple888, the telco 5G business of YTL Power is no doubt disappointing so far, as much as I wished for Yes to break even as early as in Q3 FY2024, it disappointed us with a bigger loss.

For the upcoming Q4 FY2024, I would expect smaller loss compared to Q3 as they would have signed up more 5G subscribers from expansion into smaller cities like Ipoh and Alor Setar. But I hope I am wrong and Yes would turn around in this Q4.

@Mr. OTB, I have not really studied Ranhill in details, as the MTO is still going on, I will not post any analysis on Ranhill so as not to affect the MTO process in any way.

Looking from the surface, I think there is much synergy to be derived from Ranhill after the take over by YTL Power as the latter has much expertise in managing water assets after controlling Wessex Waters for over 20 years. Wessex Waters became the No. 1 most efficient water companies in the UK as rated by Ofwat in the few years after the take over by YTL Power in 2002. A 5% cost saving from the synergy after YTLP take over would result in Ranhill's profits to double up.

Furthermore, with cooling inflation in the UK and with the 13% water tariff hike since 1st April 2024 secured by Wessex Waters, there is a strong likelihood that Wessex will turn around in the coming Q4 FY2024. I expect net profit contribution to be around RM50-100 million from Wessex to YTL Power in Q4.

And there will be maiden earnings contribution from the first phase of 8MW data centre for SEA Ltd in this Q4 FY2024, though I do not expect it to be much, a RM5-10m net profit contribution would be good enough.

@sg999, we cannot conclude that PowerSeraya's earnings will plunge in this Q4 FY2024 just looking at the USEP. No doubt USEP was exceptionally high in April-June 2023 which gave good long generation profits to PowerSeraya and all gencos last year. The high USEP was caused by higher crude oil prices / LNG prices as well as more spikes in USEP before TPC was implemented.

As I said before, the bulk of the earnings of PowerSeraya is locked in retails contracts that typically last for 6 months to 2-3 years, with pool margin contributing less than 5% profit in normal times. Last Q4 FY2023 was a bit abnormal in the sense that all gencos made exceptional gains from selling extra generation into the pool when USEP spiked up to SGD1,000/MWh or above. I remember Sembcorp CEO mentioned that SEmbcorb could have made extra pool margin of about SGD60 million in a quarter had TPC not been implemented. I estimated that PowerSeraya also made about SGD60 million of extra pool margin in Q4 FY2023 which caused YTL Power to make a record quarterly net profit of over RM1.0 billion.

Now things are looking good again after a weak Q3 in Jan-Mar 2024. We are seeing better USEP and retails margin in April and May 2024, and I expect the momentum to continue into June 2024.

I am looking forward to a better financial performance from PowerSeraya in this Q4 FY24, compared to Q3 FY24. It should be slightly lower than last year Q4 FY23 which booked in extraordinary pool margin, but the profits will still be very good.

In this coming Q4 FY2024, YTL Power's net profit may not be as high as last Q4's RM1.0 billion, but I am confident it will be higher than Q3 FY2024's RM698m.

I am not really good at technical charts but from the shrinking volume yesterday and share price having tested 2.13-2.15 level three times this week, I feel like it has hit a temporary bottom. This also means my buy orders at RM2.11-2.12 will likely never be done :(

It may not be a major catalyst, not as big as IOI Central Boulevard or Marina View Residences, but at least it strengthens IOIPG's presence in Singapore CBD area.

And it will add more value to the upcoming commercial REIT to be set up by IOIPG in Singapore to house IOI Central Boulevard as well as this Shenton 101 (which will be about 1/3 of IOI Central Boulevard's 1.29 million sf NLA).

@Kikilala3188, yes same here, I see it as positive bias for IOIPG to take over the Shenton 101 project

They have not announced EGM yet to decide on the proposal, but they will first appoint an independent advisor to evaluate the proposal. I guess we will have to wait for the independent advisor report to be out then we can evaluate it and make a more informed decision before we vote in an EGM.

The proposal is valid for 4 months until mid October, guess the EGM shall be held in September 2024 thereabout.

Posted by Aero1 > 2 hours ago | Report Abuse
USEP hit the max SGD4,500/MWh for a period in the morning as shown by the chart below. This shows the electricity supply is very tight in Singapore, and whenever there is a spike in demand or there is a generating unit tripped off or in downtime, USEP spikes up. Such occurrence will be more often going forward as demand is getting higher due to more industrial/commercial activities and new data centres and EV charging.

https://www.nems.emcsg.com/nems-prices
The USEP data here tally with EMA

While I hope that retailers will continue dumping their shares to push the share price lower towards RM2.00 or below for me to collect more cheap tickets, but it looks like the downside is limited now as foreign funds and EPF have already come in to scoop up retailers' tickets.

I agree that the proposal should have been made in a better way with more advanced information communicated to the investment public, so that such selling on IOIPG shares in past 10 days could have been avoided.

Minority shareholders who have bought in the shares of IOIPG above RM2.30-2.50 earlier are suffering now due to a poorly communicated proposal news.

On the other hand, the 14% drop in share price from RM2.50 to now RM2.16 in past 10 days is obviously overdone, as it is just a proposal, not a deal. And especially minority shareholders can have a chance to reject the proposal, so there is no damage done to IOIPG company fundamentals.

Statistics shows that foreign funds bought in a total of RM16 million worth of IOIPG shares yesterday alone, and EPF has been buying millions more in past few days as Bursa announcements show.

Hence fund managers tend to evaluate the news in a more objective way, and I think it was mainly retailers who have sold their tickets cheap to these funds on obvious over-reacting.

Just think about it, there is no deal done yet, it is just a proposal that we have every right to reject if we find out that it is not a good project.

If we have bought in earlier at RM2.30 or higher, won't it be much cheaper now to add? as there is no change in fundamentals and outlook but the share price has got 14% cheaper.

We minority shareholders hold a combined 22% stakes in IOIPG, higher than the combined 13% stakes held by EPF and ASB. With Lee family abstained in the voting, we can make a difference in accepting or rejecting the proposal.

If you don't like the proposal, just go to the EGM to vote against it.

I am sure EPF and ASB will make the right decision to protect their own interests (combined 13% stakes) in IOIPG.

With or without this Shenton 101 project, IOIPG is grossly undervalued. IOIPG is making net profit of RM800 million a year, with IOI Central Boulevard already 50% tenanted out, the expected rental income from 50% tenancy may be over SGD100m a year, which will push IOIPG net profit to over RM1.1 billion a year or EPS of 20 sen.

At current share price of RM2.16, IOIPG is trading at prospective PER of just 10.8x. The selldown in past 10 days due to this Shenton 101 proposal is unjustified as it is merely a proposal which can be easily shot down by minority shareholders.

When IOI Central Boulevard is progressively tenanted out to over 90% (the management is already negotiating for another 20% tenancy now), then gross rental income may top SGD200 million a year, and IOIPG net profit may touch RM1.5 billion, especially when Putrajaya Mariotte Hotel and Palm Garden Hotel are already up and running after refurbishment to help pushing the hospitality division of IOIPG to new heights.

I forecast that EPS for IOIPG may reach 30 sen by 2026 and higher when Marina View Residences starts to contribute in 2027. Based on an average PER of 20x for large property counters (Eco World at 20x, Mah Sing at 17x, SP Setia at 28x), IOIPG will be worth RM6.00 by 2026.

Hence, the selldown in these few days has presented a good opportunity for investors to buy low into this property giant.

For your other concern, If IOIPG minority shareholders decide to reject the proposal, then CEO Lee will have to take it back. Then he will face the dilemma of having the conflicts of interests when he develops and markets the project in competition with IOIPG's IOI Central Boulevard and Marina View Residences, or he may choose to sell the project to another party. That's his issue to deal with then.

To us as minority shareholders of IOIPG, after we reject the deal, then our own projects there will face competition with this Shenton 101 whether it is developed under Lee's private vehicle or by another party. Singapore government's intention is clear, it is to redevelop this piece of land and earn the land premium, it wouldn't care whether the developer is Lee or IOIPG or another Singaporean developer, as long as the developer can pay the land + premium.

In short, to IOIPG, it is negative bias if we reject the deal, and it will be positive bias if we take on the project and market it together with IOI Central Boulevard and Marina View Residences in synergy and not in competition.

Why this is important, as the development plan for this Shenton 101 is not finalised yet, it can be developed into another Grade A prime office like IOI Central Boulevard or a high-end serviced apartment or condo like Marina View Residences. If this project is under IOIPG, then we can see if our IOI Central Boulevard office rental is taken up well in coming months, then we may decide to develop Shenton 101 into another Grade A office and roll it out after IOI Central Boulevard achieves over 90% rental rate next year or so. If Marina View Residences are well received when it is launched end of this year, then we may decide to develop Shenton 101 into another high end condos which will be launched earliest in 2027 (as construction may start only in end of 2025).

Then we can avoid competition and can reap the maximum benefits of launching the right products into the CBD area.

@raymondroy, I think what Lee YS did is good and transparent. He could have used IOIPG to bid for the Shenton 101 project last year in the first place, but according to the statement, the bidding schedule was tight and it was quicker to use his private vehicle to bid it first. Had it used IOIPG to bid, it would have to go through an EGM first to seek shareholders' approval as the project is big, and in that case the bid would have gone through the board and shareholders' approval as Lee family controlled 65% of IOIPG. Then it would have been worse for IOIPG minority shareholders then as the timeline was tight for any shareholders to assess the feasibility of the project and vote for the bid, and Lee was holding majority of the voting rights and would have bulldozed through it.

If the bid did not require shareholders' approval, then IOIPG's management would have gone ahead to bid for it, and should IOIPG win the bid directly, then minority shareholders again would blame the management for not getting their prior approval to participate in the bid. How would you think then? Which way is better?

To me, obviously Lee has chosen the right way which is fair for IOIPG shareholders including us. He got the project first using own money, now only he proposes to inject it into IOIPG at costs, and we now have the choice to take it or leave it. We have 4 months time to evaluate the feasibility of the project and to appoint an independent advisor to to help evaluate it. If the project turns out to be not feasible for IOIPG in the long run, then we simply reject it. Important thing to note is that it is just a proposal, not a forced deal by the CEO. The CEO and Lee family will abstain from voting on this proposal.

Now come back to the Shenton 101 project itself, I am not too familiar with the prime commercial CBD area in Singapore, but from the map this Shenton House is within walking distance from major other commercial landmarks and tourists like Marina Bay and about 350m away from IOI Central Boulevard, so itself will be a prime commercial project that can fetch good rental rates. If based on IOIPG's other project in the vicinity, Marina View Residences, the potential GDV for Shenton 101 may be over SGD2.3 billion. I have seen one analyst estimating the total project costs to be about SGD1.5 billion (land costs of SGD1.0b + construction costs SGD500m), so potential gross development profits could be around SGD800 million.

If Shenton 101 is redeveloped into another Grade A prime office tower like IOI Central Boulevard, it may be able to fetch similar rental rates of SGD11.42 psf (average Grade A office rental rate in Q1 2024). Shenton 101 can have a plot ratio of 14 times when redeveloped so gross floor area may top 500,000 sf. Assuming net floor area to be rented out is 80% or 400,000sf, then potential rental income may reach SGD55 million a year. At the current market valuation of 3%-4% rental yield, this Shenton Project could be worth SGD1.4b to SGD1.8 billion.

Today selling was apparently done by short term funds and traders who seemed disappointed with the proposal announced by IOIPG CEO, they could have expected something else better.

To me this proposal is good as it shows transparency and good vision by the CEO and management. Shenton 101 is located right in Singapore CBD where high grade commercial office and residences are still high in demand.

Some analysts are concerned with the huge capital outlay of the project which will result in higher gearing for IOIPG after acquiring this project. One estimates that IOIPG would rise from 0.75x to 0.88x after paying effectively SGD1.0 billion for the project.

I agree with Hong Leong analyst's view that IOIPG gearing will come down quickly once IOI Central Boulevard is completed and IOIPG can recognise some revaluation gain of this prime asset. The cost of holding for IOI Central Boulevard is about SGD3.38 billion and the market value will be around SGD6.0 billion, so there is potentially revaluation gain of as much as SGD2.62 billion which will increase shareholders' fund by the same amount and reduce gearing to 0.61x.

Furthermore, IOIPG's operating cashflows are very strong at over RM800 million a year based on existing assets and will increase to RM1.5 billion a year once IOI Central Boulevard is 90% tenanted out.

Not to forget is that IOIPG still has over 4,300 acres of land in Kulai Johor, part of which can be monetised to reduce gearing. Disposing just 1,000 acres of land there at the minimum recent transaction price of RM25 psf will bring in over RM1.0 billion cash to IOIPG, at the most recent transaction price of RM125-138 psf will bring in cash of over RM5.0 billion to IOIPG, and gearing will drop below 0.5x.

YTL current PER is at 17x, there is still a good upside to my first target price of RM4.00. And this PER is based on current earnings base without HSR project.

I am confident that YTL will get a slice of the HSR project, likely to be the southern portion again as awarded before. The construction contract sum for this portion will be almost RM50-60 billion. Furthermore, whoever wins the HSR project, there will be huge demand boost to cement industry of which YTL's 75%-owned MCement has a majority share.

Checks on the ground indicate that the electricity retail margin continues to be strong in Singapore as USEP is back to levels well above the vesting contract price of S$210/MWh. It is likely for USEP and retail margin to stay elevated for next 2 years as supply has been tight from unit downtime for maintenance and old generating plants trip off more often and gradually get retired.

The electricity demand will get even stronger as Singapore government announced recently to increase data centre capacity by 300MW or around 30% in the near term. That will put great pressure on the reserve margin which is already close to the minimum margin of 27%.

Based on Singapore EMA's projection, there will be more than 1,000MW of old generating capacities to be retired over the next 5 years, that is almost 20% of Singapore's existing effective capacity.

YTL PowerSeraya's LinkedIn page shows that PowerSeraya has fully decommissioned some of their old steam plants and this will make way for the new 600MW hydrogen-ready CCGT to come in by end 2027.

Selling yesterday on YTL Power was done by some local institutional funds while foreign funds and local retailers became net buyers.

Guess it is normal for certain funds and retailers to just jump in and out as the share price has rallied a lot in past few months but valuation is still very cheap at 11x PER. So some cautious and early investors may choose to lock in some profits but are not completely out of this stock as they still see upsides in coming months.

Local research houses are busy upgrading construction stocks lately, raising valuation for big construction companies to PER of 20x.

YTL Corp has a projected EPS of 20 sen for FY2024. Using the same 20x PER, YTL should be trading to RM4.00. CGS has a fair value of RM3.88 for YTL, which is not too far from my figure.

@bullrun2025, IOIPG CEO proposed for IOIPG to acquire the SHenton 101 project in Singapore from his private vehicle. The CEO Lee Yeow Seng had earlier acquired the project site in an open tender last year using his own private vehicle due to the tight bidding schedule, and also due to the large capital outlay required (so as not to burden IOIPG balance sheet last year).

To me, this is a very good move by the CEO to have bidded the project first then only propose to inject it into IOIPG. Whether this will be a good project or not, it does not matter for now. IOIPG shareholders will have sufficient time now to deliberate on the deal which will require shareholders' approval at an EGM to be held. The Lee family will abstain from voting as it is a related party transaction. I think this is very transparent and fair to minority shareholders of IOIPG. We can vote to reject the deal if the independent advisor assesses that this project will not be feasible. I am sure the next major shareholders EPF (6.7% stakes) and ASB (6.4% stakes) will vote against it if it is not a good project. Our interests are protected.

Now for the project itself, I think it is potentially a good commercial asset to be held by IOIPG in the long run. The main reason for the CEO to inject this project into IOIPG is to avoid competition of this project with IOIPG's nearby projects (IOI Central Boulevard and Marina View Residences) in the CBD. With the Shenton 101 project injected into IOIPG, the company will then be able to control the timing of launches and pricing for an orderly roll out of commercial properties there.

It is not known at this stage the GDV of this Shenton 101 project. I can do a rough estimate based on its Marina View Residences project which IOIPG acquired the land for SGD1.5 billion in 2021. This MVR project has a revised GDV of SGD3.5 billion. Now in the current proposal, IOIPG will be effectively buying over SHenton 101 project at a total land cost of SGD1.01 billion so I estimate that this Shenton 101 project may have a GDV of SGD2.3 billion.

The selling yesterday and today was apparently carried out by some foreign funds trying to lock in profits as they bought into YTL Power since early Jan from RM2.50 level up. It might be prompted by share price correction of Nvidia in past 3 days (a drop of 13%) along with other AI related stocks like Super Micron and AMD. Certain investors are concerned with the waning interests in the current AI rally, but the consensus view is for the AI boom to last for another 1.5-2.0 years.

In any event, for YTL Power, the AI data centre jobs have already been locked in and earnings are set to come in next 3-4 years for AI data centres and 7-9 years for colocation data centres (with SEA and others), so the current concern on AI boom only affects the sentiment and not the fundamentals of YTL Power.

Anyway, YTL Power's share price currently only reflects the earnings from its utility businesses (power, water and telco), i.e. net profit of RM3.2b or EPS of 40 sen is currently contributed by the utility business, nothing from the AI data centre yet.

Striping out the AI part, YTL Power is still the cheapest utility stock in Bursa with PER of just 11.5x, dropping to 10x in FY2025. Tenaga is trading at how much PER?? I have lost track after its share price rallies some 40% in past 2 months.

@ValueInvestor888, the power business of YTl Power is printing money everyday giving profit of RM3.2 billion a year (from PowerSeraya RM2.8b + Jawa/Jordan Power RM400m+).

Wessex Waters is going to turn around as soon as this coming Q4, and may turn in profit of RM150 million in FY2025 increasing to RM700 million by FY2030.

This has not included future earnings contribution from UK Brabazon property business, KL WTE plant project, colocation data centre business, AI data centre business, Yes 5G turning around and digital bank JV, and PowerSeraya's new 600MW hydrogen-ready CCGT in 2028 etc.

IOIPG is consolidating with directionless trading, as there is no news since the result announcement in May end. I have not seen foreign funds selling since they accumulated IOIPG shares in April-May 2024.

The outlook for the company is still bright, with immediate catalyst of the second batch of temporary occupancy certificate to be received for its Singapore IOI Central Boulevard in next few weeks.

UOB Kay Hian Research reported that "Assuming pre-pandemic's five-year average LNG price of US$9 per mmbtu and Genting's FLNG is able to operate at its capacity of 1.2 mtps, potential revenue accretion for Genting is as high as RM2.64bil annually (8% of our 2026-2027 revenue forecasts)."

This is not too far off from my earlier estimate of S$745m revenue a year at LNG price of S$12/mmbtu. Hence, potential earnings from this FLNG project to Genting may top S$100 million from 2026.

Posted by dragon328 > 3 days ago | Report Abuse

The second news is for a development of a floating LNG facility at Papua Indonesia with a capacity of 1.2 mtpa of LNG output.

Given that LNG contains energy of 51.7 mmbtu/ton, so this project will generate output of 1.2 mtpa x 51.7 mmbtu/ton = 62 million mmbtu of LNG a year.

Using the current spot price of S$12/mmbtu for LNG in Singapore, this project may generate revenue of S$745 million a year.

Assuming a profit margin of 10%, this project may generate profits of S$75 million a year to Genting. At 15% margin, the profit contribution may top S$100 million a year.

I presume this project may have potential synergy with the 1st news, as this LNG output may be exported to China for use in the newly acquired gas-fired power plant.

Correction. The LNG price below should be in US dollars. Singapore spot LNG prices are trading at US$10-12/mmbtu in 2024, a drop from a high of US$56/mmbtu in 2022.

So the Papua LNG project may generate profits of over US$100 million a year to Genting.

Posted by dragon328 > 0 seconds ago | Report Abuse

The second news is for a development of a floating LNG facility at Papua Indonesia with a capacity of 1.2 mtpa of LNG output.

Given that LNG contains energy of 51.7 mmbtu/ton, so this project will generate output of 1.2 mtpa x 51.7 mmbtu/ton = 62 million mmbtu of LNG a year.

Using the current spot price of S$12/mmbtu for LNG in Singapore, this project may generate revenue of S$745 million a year.

Assuming a profit margin of 10%, this project may generate profits of S$75 million a year to Genting. At 15% margin, the profit contribution may top S$100 million a year.

I presume this project may have potential synergy with the 1st news, as this LNG output may be exported to China for use in the newly acquired gas-fired power plant.

The second news is for a development of a floating LNG facility at Papua Indonesia with a capacity of 1.2 mtpa of LNG output.

Given that LNG contains energy of 51.7 mmbtu/ton, so this project will generate output of 1.2 mtpa x 51.7 mmbtu/ton = 62 million mmbtu of LNG a year.

Using the current spot price of S$12/mmbtu for LNG in Singapore, this project may generate revenue of S$745 million a year.

Assuming a profit margin of 10%, this project may generate profits of S$75 million a year to Genting. At 15% margin, the profit contribution may top S$100 million a year.

I presume this project may have potential synergy with the 1st news, as this LNG output may be exported to China for use in the newly acquired gas-fired power plant.

Genting announced 2 good deals yesterday.

The first is an investment to acquire a 49% stake in a gas-fired power plant of 2 x 745MW in China for RMB100m or RM65 million.

This power plant is expected to generate revenue of around US$350 million a year for the next 25 years.

Power projects in China typically generate single digit returns. Assuming a 7% pretax margin and 5% net profit margin, I expect this power plant to generate net profit of US$17.5 million a year. For Genting's 49% stakes, the net profit contribution may come to US$8.6 million or RM40 million a year.

Hence, Genting aims to get back return from this investment within 2-3 years.

@bullrun2025, I have been accumulating more IOIPG on weakness, but I think the technical chart looks not good, support seen at RM2.25-2.31.

Decision is yours whether to add more or when to add more.

@cwc1981, I think the cooperation model may be different for the HSR project from the earlier JB-Gemas double-track railway project which is purely a construction project.

The KL-Singapore HSR is a privately funded project where the project sponsors will be a private consortium such as YTL-China entity who will come out with the required funding to complete the construction and then recover the investment through a long term concession of operating the HSR. It will be more like the model used for the ERL project.