@cgtan2020, yes you were right. They just blocked any mention of other financial website link

Foreign funds may have more and faster info than us retailers, eg. some of them might have known that SimmplyWlSt was going to upgrade YTLP but we retailers only got to see it today

I have tried to post some comments at least 5 times but it just failed to get posted

ya frustrating

For example, I bought in Padini when it was lingering at RM1.20-1.30 at one time, then suddenly the share price jumped to above RM2.00, and after a short consolidation around RM2.00 then it rallied up non-stop to a high of RM4.60, then a short pause before it rallied further to RM6.00

@cgtan2020, I cannot remember which year, but rather individual stocks that foreign funds used to chase high previously.

I will just stop here until i3 fixes the problem

for some reason, I am not able to post long comments

@HumptyDumpty, you are right that YTLP share price rally in the new year really took me by surprise. But if we fall back a step and look at previous rounds of foreign funds buying in Bursa, the share price rally in YTLP has been well within expectation.

I did not manage to post any comment, will try again

...no need to get too excited ..

haha I will stick to my ID as 328 for now. Just let the share price run until it significantly exceeds the fair value. Each level of resistance is just a number for technical chartists, most of them got beaten time and again as fundamentals over ruled. So need to get too excited, but also don't chase high.

Happy new year!

The Niseko land bank is under YTL Corp. Only Hilton Niseko Village has been injected from YTL Corp into YTL REIT so far, the other 5 hotels/resorts are still under YTL Corp to be injected into YTL REIT when each asset matures.

First it was YTL who ran up first from RM1.50 to RM1.95 then YTL Power followed to run up from RM2.50 to RM3.00, today it was YTL turn again to push ahead higher in % terms.

Congras to all who still hold on. Have a good weekend.

So good to see that Genting still managed to close higher than previous high of 4.71, despite the price of Genting Singapore lingering around SGD1.00.

Is some good news coming or foreign funds coming in?

Good closing today!

Congras to all who still hold on. Have a good weekend.

Anyway the market has not priced in any earnings contribution from Brabazon project in YTLP earnings projection, nor given any value to this massive property project in sum-of-parts valuation of YTLP.

As for that matter, the market is still giving zero value to all other assets of YTL Power, i.e. Wessex Waters, Jordan Power, Jawa Power, data centres, digital bank, WTE project etc. Analysts are still hopping on the issue of earnings sustainability of PowerSeraya only.

But foreign funds are moving ahead of them in the new year.

@harvest6138, that is good news. With the first batch of new houses under this second phase to be completed in late 2024, we can expect more meaningful earnings contribution from this Brabazon project to YTL Power starting from Q2 FY2025.

@hoplanner, that's the issue with some of these local analysts. They do not know how to react now after their earlier earnings projection was made too low due to whatever reasons only known to themselves.

I saw the report and was hoping that this analyst would use the WTE project or AI data centre to raise the tp for YTL Power but unfortunately he did not make any adjustment to the target price. Guess his hands were tied.

Actaully if local analysts are unsure of how to project earnings for PowerSeraya, they can check with their counterparts in Singapore who cover Keppel or Sembcorp to get a sense of how they think the earnings of power companies in Singapore will look like in next 2 years, rather than acting like an expert that they should not be.

These local analysts are more familiar with the monopolistic electricity market in Malaysia, and that's why they are comfortable with bullish earnings projection for Tenaga, and seemingly optimistic of the recovery of the huge receivables sitting in Tenaga balance sheet.

@factfinder93, I am not worried at all with any risk of defaults for the shareholders' loans given to Jordan Power by YTLP.

The reason is simple. Due to the ongoing conflict between Israel and Hamas and potential escalation into regional areas, the gas supply from Israel to Jordan is getting disrupted. Hence most of the gas fired power plants in Jordan are not able to run but the country cannot do without electricity supply. What is being observed on the ground is that the YTLP's oil shale-fired power plant in Jordan is being dispatched to the max as Nepco desperately needs the electricity supply as there is not much alternative.

Though it was reported earlier that Nepco had been paying only half of the PPA payments to Jordan Power, but I think situation is going to change pretty soon. As you simply cannot hope for Jordan power to run to the max but just pay them half the money, right??

Shareholders' loans are ranked behind or pari-passu with senior debts, so far we have not seen any sign of default for any senior debt.

@hoplanner, when I wrote about Sembcorp at 11x PER, I was using the past earnings as indicated in google or Yahoo Finance, each indicated a PER of 10.8x and 10.6x respectively.

But it does not matter when each used the past FY or past 4 quarters rolling earnings. The more important is future earnings, not past. There must be some basis for DBS analyst to give a PER of 14x on FY2024 earnings to Sembcorp, probably based on the understanding that the strong earnings seen in past few quarters would continue to be stable.

PowerSeraya made a net profit of SGD246 million in Q1 FY2024, going forward if I take a more conservative view and assume a steady net profit of SGD200 million every quarter, PowerSeraya should be able to make net profit of SGD 800 million a year for FY2024 & FY2025 at least.

Using a fair PER of 10x, PowerSeraya should be worth SGD 8.00 billion minimum. If using DBS valuation of 14x PER, PowerSeraya would be worth SGD11.2 billion. even at the conservative valuation of SGD8.0 billion, PowerSeraya is worth RM28 billion to YTL Power as it is a 100%-owned subsidiary. What is the market cap of YTL Power now? At RM3.16, it is RM25.8 billion, 8% lower than the valuation of PowerSeraya alone.

That's why I said above foreign funds are getting all the other assets (Wessex, Jordan Power, Jawa Power, data centres, WTE project, digital bank, potential RE export to Singapore etc) for free!

The share price movement is not dictated by a few words that you said or I say, the volume of YTL Power shares traded over these few days are so high that it can only be foreign funds aggressively buying.

Foreign funds can access to more up-to-date information and more professional reports by Singapore analysts on the Singapore electricity market from research reports on listed companies there like Keppel and Sembcorp.

It is no mistake that both Keppel and Sembcorp are trading near 5 year high, at PER of 11x to 12x based on past year earnings. Investors in Keppel and Sembcorp must be happy with the earnings projection given by the respective management when they pay 11x or 12x PER for the stocks. Foreign funds must be finding YTL Power as a cheaper alternative to power plays in Singapore, as currently PowerSeraya contributes over 80% of earnings of YTLP. Even based on sole contribution from PowerSeraya alone, YTLP is trading a forward PER of less than 8.0x compared to 11x for Sembcorp. And they are getting all other assets (Wessex, Jordan, Jawa Power, data centres, WTE project, digital bank etc) of YTL Power for free.

You are right that stock market is forward looking. How far ahead would you look ahead? 12 months? 2 years? If PowerSeraya/YTLP management tells you that the strong earnings will continue into 2026, meaning FY2024 and FY2025 and possibly FY2026 earnings will be as strong from Singapore. How far ahead more will you want to look ahead?

Just because you have taken profit or have completely missed out on this rally, you can start talking bad on the company. But it will not do any good to yourself or investment income.

@Ytl2023, you can be skeptical of PowerSeraya earnings going forward, just as are so many local analysts. But you are not expert in Singapore electricity market, so are not these local analysts who play down on PowerSeraya earnings. They have been shouting to see "normalisation" of PowerSeraya earnings for months, and each time they got slapped.

Nobody understands the Singapore electricity market than PowerSeraya (or Sembcorp/Keppel) management, not you, not these local analysts, not me.

If PowerSeraya management had guided for strong earnings to continue into 2026, I have little doubt over what they guided for.

It is some of the local analysts who jumped the gun to forecast for a sooner "normalisation" of earnings. And what would be the "normalised" earnings? They wouldn't know also.

@Ytl2023, it is not quite right to compare YTLP's Singapore earnings contribution to those of furniture companies. There was a time when our Malaysia furniture companies enjoyed good profits by exporting furnitures to the US as the property market demand there was very strong. Coupled with strong US dollars, the profits earned by our furniture companies in ringgit terms became larger. Pls take note the key difference here, they made good profits mainly because of the strong demand in the US that gave them a good profit margin, a strong US dollar only multiplied the profit effect. If the underlying profit margin is low, then even a strong US dollar cannot help. You can see now that US dollars now are even higher than those times when furniture companies made good profits. Why are they not making as much profit now when US dollars are at the highest close to RM4.70-4.80??

In the case of YTL Power, the strong contribution from Singapore PowerSeraya is no doubt amplified by the strong Singapore dollars, but the important thing to note is that PowerSeraya's underlying core profits are good at SGD200+ million every quarter. Whether the exchange rate is 3.50 or 3.35 last year when I first recommended, the difference is not big when you multiply the strong core profit of SGD200+ million.

@Pinky, I don't set any particular target price for Wellcall, but just hold on for its growing dividend payouts as the business grows.

If the strong earnings momentum continues into 2024, Wellcall will have free cashflows of 12.7 sen or higher for 2024. Based on 7% cashflow yield, Wellcall should be worth RM1.81 in 2024.

Mr. OTB, that's just joke, it's okay. I don't drive a BMW and do not have any intention to upgrade my car anytime soon.

The important thing is everybody can earn some decent profit from this stock by holding onto it this far. I will continue holding on for dividends which will be better than any other passive income from fixed deposits or EPF.

On new call warrant issuance, you are probably right that investment banks are restricted by the high capital cost of holding the mother shares for hedging.

For instance, C33 has a issued quantity of 150 million shares which are a big one. For a conversion ratio of 1.5x, the issuer bank should need to hold 150m/1.5 = 100 million shares of YTL Power mother shares in order to hedge 100% of its call warrants issued. To buy 100 million shares of YTL Power, the issuer bank needed to set aside RM200 million of capital if YTLP was at RM2.00 at issuance date.

But if the call warrant was issued at a decent premium of 15% to 20%, then the issuer bank would have earned some 12sen to 15 sen x 150m = RM18 to 22 million of gains upon issuance. That would be about 10% gain over the required capital layout of RM200 million in just 6 to 8 months.

And upon expiry of this C33 call warrant on 28 Feb 2024, the issuer bank can then issue a new batch of new call warrants on YTLP by holding onto the 100 million shares it used to hedge against C33.

They can just keep doing that every 6 to 8 months by using the same capital outlay on the same stock, as long as the underlying stock continues to perform well and the market expects the stock to continue going up so they will buy the new call warrants for higher leverage.

@HumptyDumpty, for the record, you cannot exercise any call warrant, it is not the same as other traditional warrants with a stock code of -WA, WB etc.

Most or All of the call warrants on Bursa are cash settled upon expiry by the issuing bank at the settlement price which is calculated as follows:

(the last 5-day average price of mother share before expiry - conversion price)/conversion ratio

Take the example of YTLPower-C33, the conversion price is RM1.65 and conversion ratio is 1.5x, so for an average final price of say RM2.99 upon expiry, the theoretical settlement price would be (2.99 - 1.65)/1.5 = RM0.893. C33 is trading at RM0.885-0.890 which is at a slight discount to the fair value.

FYI, as of 30 Sept 2023, YTL Power had gross cash of RM8.2 billion in its balance sheets, ready to for deployment to fund any future new projects.

And its operating cashflows are very strong, which will help to fund new projects. For the Q1 FY2024, YTLP registered operating cashflows (before working capital changes and capex) of RM1.7 billion, deduct capex of RM956 million, it had free cashflows of RM745 million for Q1, annualised to RM2.98 billion (after funding estimated capex of RM3.8 billion).

So it should have no issue of giving out dividends of RM1.0 billion to RM1.2 billion for FY2024/2025.

@xiaochen, the investments that you mentioned above will be more of capex nature, i.e. these will be capitalised in the balance sheet when the investments are made, instead of being expensed off in the P&L. So these investments will not affect earnings per share or drag down EPS.

Only after the investment capex is completed, then depreciation charges related to the new investment capex will kick in and reduce profits before tax, then only it will reduce EPS. But if the new investment is earnings accretive, then the new income stream will be more than the depreciation charges and interest expenses related to borrowings made to fund the new investment, hence EPS should rise further.

@xiaochen, what I have in mind for the projected EPS of 40 sen for FY2024 is largely inline with what you projected above, i.e. RM850-900m net profit every quarter for next 2 years to 2026.

One thing I don't quite understand how these local investment banks are thinking when they tried to push down the valuation of YTL Power. Could they earn more money by doing that?

They advised local funds like EPF to dispose off large positions in YTL and YTL Power in 2023 when the share prices were below RM1.00. Could they have earned a lot of commission or advisory fees in doing the selldown?

If they advise some foreign funds or clients to buy shares in YTL Power by getting the company to place out 1% or 2% blocks, wouldn't such deals earn them more advisory fees & commission?

Another thing is that some local investment banks issued call warrants on YTL Power but did not hedge 100% by buying enough mother shares, so they tried to push the mother share down before the expiry of the call warrants so that they didn't have to pay more for cash settlement of the call warrants. I just wonder how much they could save in doing that, and whether they would have made a loss in that issuance of the call warrants.

Why not just issue more new call warrants and hedge 100% with mother shares of YTL Power? Then the investment banks can safely pocket the 15% to 20% premium in call warrant issuance, rather than taking the risk of under hedging and the continued share price appreciation of the mother share upon expiry of the call warrants.

Just imagine, if an investment bank issues 100 million of new call warrants, and a 20% premium in issuance price (eg. 3 sen premium in a typical 15 sen new issuance price), the bank will earn easily RM10-12 million fee upon issuance of the call warrants immediately without risk. Why don't they do that?

If a bank issues 3 batches of call warrants on a stock like YTL Power, it can earn a handsome, risk-free gain of RM30-40 million over a period of 6-9 months.

Of course they will need big capital to hold some mother shares for hedging.

@cgtan2020, do not expect many of the local analysts to raise the tp for YTL Power. You can see from the commentary from these analysts in the TheEdge article above.

Having missed out on the strong earnings rebound of YTL Power, these analysts will be reluctant to raise target prices much. You can see that the narrative from them is quite similar, more so like a collaborative effort to downplay the earnings growth of YTLP.

One said for 2-year retails contracts locked in early/mid 2022, PowerSeraya earnings may have peaked. What kind of bullshxt is this? The fact is that PowerSeraya earnings started showing strong rebound in early 2023 (remember PowerSeraya reported PBT of RM290m in Sept 2022 qtr, PBT of RM301m in Dec 2022 qtr, PBT of RM806m in Mar 2023 qtr, PBT of RM1067m in June 2023 qtr, PBT of RM1025m in Sept 2023 qtr), and not early 2022 as this analyst stated.

I guess this is how they try to justify a low valuation for YTLP by projecting that PowerSeraya earnings have peaked and will normalised down very soon. But they will get beaten down again next month when YTL Power announces the Q2 FY2024 results.

@cgtan2020, stock market is always forward looking, that's why I use the prospective earnings of FY2024 & FY2025, rather than the rolling 4 past quarterly results. Just as ones would not use the past earnings of glove stocks in 2021 to value them.

My earnings estimate for YTLP FY2024 does not even include a potential turnaround of Wessex Waters. For the projected 40 sen EPS for FY2024, I just assume zero earnings contribution from Wessex Waters, until I see more convincing turnaround in Q2 FY2024 or Q4 FY2024 after the next water tariff hike.

@probability, you are right that most analysts are struggling to evaluate the potential upsides from YTLPower-Nvidia tie-up in AI data centres, myself included. I guess we may have to wait till the 1st phase of these AI data centres to be up and running in mid 2024 then only we can have firmer estimates of its earnings contributions.

If it turns out to be significant, then YTL Power may turn to be more like a tech stock which typically enjoys PE ratios of 21 times as the article suggests.

Local analysts are still promoting glove stocks like Harta and Kossan, and tech stocks like Inari. You can check the valuation of these counters too.

They are not promoting YTL Power for reasons only known to themselves.

Despite the strong share price run up in 2023, YTL Power is still the most undervalued big cap in Bursa by far.

I have done the comparison with Tenaga, PetGas & Dialog earlier, you can check the same with PMetal, TM, Nestle, PetDag, MISC, other utilities counters to see how high their PER are.

40 sen EPS for FY2024 and FY2025 still has not included any contribution from the new AI data centre, WTE plant, any profit from Yes and digital bank, MLFF if materialised, Brabazon project in the UK, equity account of any profit from Ranhill and subsequent phases of data centres in Kulai and potential RE export to Singapore.

PER is still below 7.0x based on projected EPS of 40 sen in FY2024

Good article!

It does not seem to be possible to leave a comment at the bottom of your blog post, so I just post my queries here.

May I know if you have a breakdown of revenue for domestic and non-domestic consumers of PBA? This is to estimate how much revenue increase should PBA secure a water tariff hike for domestic consumers.

Do you expect the positive tax rate to continue in coming quarter(s)?

Posted by dollardollarbill > 19 hours ago | Report Abuse

PBA Holdings Bhd: (P)rofits to (B)ecome (A)bundant?
https://klse.i3investor.com/web/blog/detail/dollardollarbill/2023-12-28-story-h-211507880-PBA_Holdings_Bhd_P_rofits_to_B_ecome_A_bundant_dollardollarbill

Good to see Genting Singapore breaking up SGD1.00 again. Hope it will stay above and retest pervious highs soon.

@fx115w, lets make it 2 pints! Cheers!

https://finance.yahoo.com/news/opportunity-ytl-power-international-berhads-022543455.html

@xiaochen, share trading using AI has been very popular in China of late, and Singapore is catching up too. If fund managers use AI in picking stocks in Bursa, they will know YTL Power is so much under-valued at current prices, as computed by SimplyWt below:

https://finance.yahoo.com/news/opportunity-ytl-power-international-berhads-022543455.html

@xiaochen, share trading using AI has been very popular in China of late, and Singapore is catching up too. If fund managers use AI in picking stocks in Bursa, they will know YTL Power is so much under-valued at current prices, as computed by SimplyWt

@xiaochen, share trading using AI has been very popular in China of late, and Singapore is catching up too. If fund managers use AI in picking stocks in Bursa, they will know YTL Power is so much under-valued at current prices, as computed by SimplyWt below:

https://finance.yahoo.com/news/opportunity-ytl-power-international-berhads-022543455.html

@TimiraosL, now on hindsight, the news link you sent above is related to the story behind the selldown of bank stocks yesterday. You were sharp.

@TimiraosL, this looks like only affecting foreign banks?

But local bank stocks like Hong Leong Bank, CIMB and RHB are top losers today

Does anyone know why bank stocks are under heavy selling today?