@klee, let's put this straight, I am not competing with anyone here in promoting this stock. Mr. OTB has my respect and he just happened to be promoting the same stock.

My intention of releasing this article was to give a full picture of the earnings potential of YTL Power in the long run, and hopefully those who were still holding the stock would not sell off just because of one weak quarterly result. But apparently the market was full of short term traders and investors with very short span of investment horizon.

I am not sure what Mr. OTB has done but it would not bother me, as he has his own followers to guide and answer to. My intention has always to discover undervalued gems and promote long term investment for 2 years to 10 years or beyond.

@Nickellee, well said.

In fact, I purposely release my article early yesterday to give enough hint on what to expect from Q3, but unfortunately the market has still over-reacted to one quarter of weak results.

Anyway, these short term traders and short-sighted retailers are selling their tickets to the foreign funds, as indicated by Macquarie analyst at noon, who called it a buying opportunity you have been waiting for with 50% upside to its target price of RM7.30.

This morning selling was from short term traders and short-sighted investors in a form of panicked selling. Actually the Q3 result was not too bad, earnings for YTL and YTL Power were much higher than last year corresponding quarter.

Coming quarters will be stronger for YTL Power and YTL, as Wessex Waters starts to break even in Q4 FY2024, and 1st phase data centre starts to contribute maiden earnings.

The AI data centre division will lead the way to another leap in earnings from FY2025.

Yes raymondroy, PowerSeraya still delivers solid earnings like a fixed deposit.
Unfortunately the market is full of short term traders and short-sighted investors who are taking the weak Q3 result to take profit and punish the stock.

The long term prospects are very good, the current share price weakness is a good opportunity to accumulate for long term investment.

Good move to buy at RM4.80 or below.

It is good to flush out some short term traders and let the stock cool off a bit, before we can see slow and steady climb later.

Q3 was just a blip, coming quarters will be stronger

CIMB raises tp for YTL Power to RM5.50

MIDF raises tp to RM6.35

Only Maybank lowers tp to RM5.20

Hong Leong upgrades tp for YTLPower to RM7.55

Affin upgrades tp to RM6.45

Good upgrades, unbiased

@probability, I would expect the AI infrastructure (AI data centre) to be ready first before the big cloud like AWS could use it to provide cloud computing services. But it will be more or less the same timing, as I would expect big cloud like AWS will be able to secure customers months before the AI data centre is ready

Okay that's all for the Q3 update.

It is a temporary blip, and I am confident Q4 will be better as we shall see Wessex turn around and maiden earnings contribution from SEA data centre.

FY2025 and FY2026 will be even more exciting as AI data centres come into play.

Then come FY2028 we shall see another jump in YTL Power earnings when PowerSeraya's new 600MW hydrogen-ready CCGT enters into commercial operations from Jan 2028.

Not much surprise from YTL Q3 result, another beat compared to last year, though slightly lower than Q2. It was dragged down by a lower earnings contribution from PowerSeraya but the net profit of RM700 million from PowerSeraya was considered very good. I expect this to continue well into 2026.

Cement division registered an excellent 70% increase in PBT compared to last year.
Hotel division made a bigger jump of 115% in PBT compared to last year.

These two are the positive surprise.

9 months EPS comes to 29 sen, annualised to 39 sen which should meet my projected earnings of RM3.2b for FY2024.

Going into FY2025, we can expect some small profit contribution from Wessex after the water tariff hike from April 2024, steady earnings contribution from PowerSeraya, Jawa Power and Jordan Power, maiden earnings contribution from UK Brabazon property project, RE export to Singapore, co-location data centre with SEA and 6-month contribution from AI data centre. I estimate these should help to push for higher earnings of YTL Power to about 46 sen of EPS in FY2025.

At current price of RM5.38, YTL Power is trading at undemanding forward PER of just 11.7x.

Given the strong operating cashflows, it is not a surprise that the interim dividend is higher at 3.0 sen, compared to 2.5 sen last year.

Total borrowings remained at RM31b as of 31 Mar 2024 but cash holdings increased by RM400m to RM5.4b.

Operating cahsflows before capex and working capital changes increased to RM4.0 billion in 9 months of FY2024, annualised to RM5.3 billion which will be sufficient to meet capex requirements.

Capex totalled RM2.6 billion in the 9 months.

Investment Holding Activities are contribution from Jawa Power, Jordan Power and also data centre division. As the 1st phase data centre with SEA Ltd was completed in late March 2024, so earnings contribution from data centre division to YTL Power should be negligible in Q3.

This means that Jawa Power and Jordan Power have contributed higher earnings of PBT RM150 million in Q3 from RM125m in Q2. This is encouraging, just as what I projected in my article for Jordan Power to register higher earnings every year as the project loan gets gradually paid off (hence lower interest expenses), and higher generation due to natural gas supply disruption in Jordan.

Yes 5G division continues to disappoint with a larger loss of RM123m in Q3. Ground checks in Ipoh show that Yes has not been as aggressive as Maxis and CelcomDigi in attracting 5G subscribers with less promotion activities and a lot less representative shops. It does look like it will take longer time to break even, and I may have to allow some losses in FY2025 (currently I assume it will break even in FY2025).

Wessex continued to bleed in Q3 with slightly smaller loss compared to Q2. This is so as UK inflation eased further in Q3 compared to Q2 and hence provisions for index-linked bonds were lower in Q3.

UK just announced CPI of 2.3% for the month of April 2024, the lowest in more than a year. Hence I will expect provision for index-linked bonds to be smaller going forward, which will help to turn around Wessex sooner.

Wessex has already gotten water tariff hike of 9+% from 1st April 2024, so I expect Wessex to register a small profit of RM30-40 million in this Q4 FY2024.

YTL Power registered a decent set of results for Q3, though net profit of RM700m is lower than Q2 & Q1 when PowerSeraya was benefitting from high wholesale pool prices and some high margin retails contracts.

As I have earlier pointed out, I expected PowerSeraya net profit to be about S$180m to 200m per quarter. In this Q3, PowerSeraya contributed PBT of RM843m or net profit of RM699m = S$200m which was at the top end of my estimate.

Given that USEP in Singapore has already rebounded in mid March from a low in Feb, I expect such net profit of S$180m-200m per quarter for PowerSeraya to continue well into 2026.

I have in my latest article posted this afternoon projected a total net profit contribution of RM3.0 billion from PowerSeraya in FY2024. Now we have 9 months net profit of RM2.4 billion (PBT of RM2.9b x 83%) already from PowerSeraya, so if we have another RM700m of net profit from PowerSeraya in Q4, then full year net profit contribution may beat my estimate of RM3.0b for FY2024.

For FY2025, I have projected a net profit contribution of RM2,625m or S$750m from PowerSeraya. PowerSeraya was doing S$200m in this Q3 and I would expect this to continue in following quarters as there is no new capacity coming in before 2026. So PowerSeraya is likely to beat my projection for FY2025 as well.

Though there may be positive surprise in YTL and Mcement earnings tonight, judging from the last minute buying of both stocks.

Tomorrow we shall see other analysts' update reports.

@pang72, I don't think there will be any negative surprise in upcoming results tonight as most of the business divisions are performing well as expected.

I don't think I will need to update on every quarterly result going forward, perhaps on any new development or when AI data centre division starts to contribute earnings next year.

@cktay, I can understand your frustration, same over here. I have been holding Genting shares for more than 2 years but I accumulated some early during Covid times so my entry cost is around RM4.00.

Genting share price has been affected by negative perception of its related party transactions and top management corporate governance issues. But I think as long as the company fundamentals are intact with growing earnings outlook, the market will eventually give it a fair re-rating. Patience is needed to reap this reward.

https://klse.i3investor.com/web/blog/detail/dragon328/2024-05-23-story-h-161458128-YTL_YTL_Power_The_Best_Performing_Stocks_May_Again_Double_Up_in_AI_Driv

For leisure read. You may consider gaining some exposure to the parent YTL

https://klse.i3investor.com/web/blog/detail/dragon328/2024-05-23-story-h-161458128-YTL_YTL_Power_The_Best_Performing_Stocks_May_Again_Double_Up_in_AI_Driv

Both YTL and YTLP shares and earnings will be driven by AI data centres in next few years

https://klse.i3investor.com/web/blog/detail/dragon328/2024-05-23-story-h-161458128-YTL_YTL_Power_The_Best_Performing_Stocks_May_Again_Double_Up_in_AI_Driv

My latest estimates of YTLP earnings for next few years

The Investments & Others as well as Share of Results of Associates and JV can swing the result by +/- RM100 million, which I am not able to estimate.

If I were to estimate the net profit of Genting for this Q1 FY2024, I would use its previous Q4 FY2023 result as the base - net profit of RM150 million (including the extraordinary impairment at Genting Singapore).

I would expect Genm to report slightly better results in Q1 FY24 than the RM183m core net profit in Q4 FY23, perhaps touching RM230 million. So the additional earnings contribution to Genting would be (230-183)x 47.1% = RM22 million

Genting Singapore already reported a substantially higher net profit of S$247.4m in Q1 FY24, more than double of net profit of S$118.6m in Q4 FY23. So the additional earnings contribution to Genting would be (247.4 - 118.6) x 3.50 x 52.6% = RM237 million.


Assuming the same earnings from other divisions (oil & gas, power & plantation and Las Vegas) of Genting, I would expect Genting to report a net profit of RM150m +22m +237m = RM409 million.

It may look lower than what many have expected, but it would be 4 times higher than Q1 FY2023 net profit of RM98 million.

Anyway Hong Leong analyst projects a net profit of RM1,763 million for FY2024, and Maybank projects higher net profit of RM2,110 million for FY2024, averaged at RM440m to RM527m per quarter.

I would be happy for Genting to beat my estimate above.

@keyman, I am not the sifu, ATK and Michael Chan are the sifu here.

I have tried to promote Genting and Genm since Jan 2023, taking it as ones of the key beneficiaries of post-COVID recovery plays. But due to various reasons, the share price has not moved up much due to negative market perception of the following:
1) Genting Singapore expanded capex for Sentosa 2.0 from S$4.5b to S$6.8b announced last year, which made the investment public skeptical of returns from such big investments and lower dividend payouts

2) the long process for TauRx in getting necessary conditional approval for its Alzheimer's treatment drug

3) injection of another US$100 million by Genm into US Empire Resorts

4) Closure of Hard Rock Hotel at Sentosa for renovation

5) bigger than expected provision for deferred charges in Dec 2023 quarterly result of Genting Singapore

Most of the issues above have been resolved or are beyond the management control:

1) The expanded capex is for a bigger development at the Waterfront project at Sentosa and will add 700+ hotel rooms, a large shopping mall and exhibition hall. This will help to propel the improvement in non-gaming revenue towards 40% of revenue, from 28% in FY2022 and 32% in FY2023. Genting Singapore registered operating cashflows of about S$900 million in FY2023 and is expected to achieve over S$1.0 billion of operating cashflows a year from FY2024. Furthermore it had S$3.6 billion of net cash as of 31 Dec 2023. Hence GS should have no issue to fund the balance capex of S$4.3 billion (it has already spent some S$2.5b as in mid 2023), i.e. S$800 million a year of capex from FY2024-2028. Total operating cashflows will exceed S$5.0 billion over the period of 2024-2028, plus the S$3.6b cash, GS should be able to fund the remaining capex of S$4.3b + S$2.4b of dividend payouts (4.0 sen each year) over the same period.

2) As for TauRx and based on regular updates from ATK, it looks promising for it to get conditional approval by end 2025 (correct me if wrong)

3) The injection of US$100m into US Empire Resorts was seen by many as an infavourable related party transaction, but I view it differently. As I explained in my previous article on Genm on 1 Mar 2024, the equity injection will increase Genm's equity stakes in Empire Resorts to 90%. Empire Resorts are expected to break even very soon, in fact it was already EBITDA positive since 2023. It should be able to register positive cashflows of US$50million by 2027

4) Hard Rock Hotel was closed for renovation and is scheduled to re-open its doors in early 2025

5) The large deferred tax provision in Dec 2023 did not recur in Mar 2024

Thanks Goldberg for the update.

The appointment of Foong will help to ensure YTL-SEA Digital Bank JV to break even in 2-3 years, like what SEA Money has achieved, EBITDA positive since last year.

Anyone here can just send an email to bursa2u@bursamalaysia.com to file a complaint.

When more people do so, it is more likely for Bursa to take some action against CIMB.

Ya it doesn't look like Bursa has taken any action against CIMB. C28 is still trading at a big discount.

It was a general reply from Bursa, and I do not expect them to tell us exactly what they will do. I am hoping for Bursa to take stern action against CIMB in this case, unless there are more complaints filed against CIMB in the coming days.

I hope those of you who have bought AEON-C28 can make a complaint to Bursa as well tomorrow if CIMB continues to generate computer orders at a significant discount to the fair value of the call warrant.

@Rambutan9, below is the reply from Bursa on my complaint:

Dear Sir/Madam,

 

Thank you for your e-mail.

 

The Exchange closely monitors trading activities in counters traded in the marketplace. Our real-time monitoring and surveillance of the marketplace include (but are not limited to) analysis and examination into all trading activities influencing the price, volume and/or order-book positions of securities which will provide basis to establish irregularities/suspicious trading activities.

 

The Exchange will initiate the necessary action including market surveillance measures to ensure fair and orderly trading and/or referrals to the Securities Commissions should there any breach to the Business Rules and/or the CMSA 2007.

 

In the event of dispute, you are advised to seek clarification from your broker or refer the matter to SIDREC for arbitration.   

 

Thank you

Have a good day!

Our Ref : CAS-33081-R8N1D8

Thanks Goldberg for the TA report.

TA analyst forecast EPS to reach 13 sen by 2026 and dividend payout of 7.0 sen for FY2026. I see that AEON's strong operating cashflows will be more than enough to support the dividend payout of 7 sen.

TA forecasts that AEON operating cashflows to be RM530 million in FY2025, minus out expected capex of RM250m, free cashflows may top RM280 million or 20 sen per share, easily supporting dividend payouts of 10 sen of more as AEON will become a net cash company by 2025.

I need to qualify that the calculated fair value of RM11.33 is based on a bullish projected EBITDA of S$2.0 billion for Genting Singapore in FY2028 and a decent valuation of 13x EV/EBITDA (most analysts currently only gives a valuation of 10x EV/EBITDA or below).

One has to assess oneself whether Genting Singapore can increase its EBITDA from currently S$1.4-1.5b in 2024 to S$2.0b in FY2028. I see it quite likely so given the expansion in the Universal Studios, Oceanarium and additional 700 hotel rooms in next 3 years.
Hong Leong's SOP valuation of Genting in Feb 24 was based on a fair value of S$1.12 per share for Genting Singapore. Its tp of RM7.12 was based on a 45% holding company discount to the SOP valuation of RM12.94 for Genting.

When Genting Singapore EBITDA reaches S$2.0b in FY2028 or FY2030, even if I use Hong Leong's valuation of 9.5x EV/EBITDA (instead of 13x EV/EBITDA used in the article), the increased valuation of Genting Singapore will give an additional value of RM4.23 to Genting's SOP to get a revised SOP of RM17.17. Applying the same 45% holding company discount, Genting should be worth RM9.45 per share.

Posted by Michaelchan2024 > 23 hours ago | Report Abuse

https://klse.i3investor.com/web/blog/detail/dragon328/2024-05-11-story-h-181779531-Genting_Snigapore_Sentosa_IR_Driving_Growth
Genting - Singapore Sentosa IR Driving Growth

- These three upsides would be sufficient to double the valuation of Genting from RM11.33 to RM22.68 per share by 2028.

Michaelchan2024, I have not updated this article since the initial post, as there has been no sign of movement on the ground, especially in the US, to warrant an update. In that article, I gave a lot of values to the potential new New York casino and the potential listing of Las Vegas Resorts World in the US. But as interest rates in the US remain high and current consensus is for first rate cut in Sept 2024, so I would expect any potential US listing to be delayed to 2025 earliest to allow time for interest rates to come down below 5.0% and to get a better valuation.

The New York casino bid is also delayed due to ESG issues, it looks like the RFP will be released towards end of 2024 and final bid in 2025.

Posted by Michaelchan2024 > 23 hours ago | Report Abuse

https://klse.i3investor.com/web/blog/detail/dragon328/2023-01-06-story-h-301897649-Genting_Bhd_Strikes_Gold_in_the_US

Genting Berhad strike Gold in the US

Hi dragon328, if you have updated the article, could you please share the latest version? Thanks

@Goldberg, can pm me the research report of TA on AEON please?

Strong close today at another record high!

More to come next week.

Have a good weekend!

Good closing at RM1.40 today. With the strong close today, technical chart reading all turns positive.

The total trading volume of these 2 days is over 70 million, indicating that some funds have accumulated around 5% stakes in AEON just in 2 days.

Another record high closing! Congras to all who still hold on.

More to come in next few weeks.

It is a nonsense for certain parties to claim YTL is over-valued at current prices.

Based on annualised earnings of 20 sen for FY2024, YTL is trading at less than 19x PER. Earnings are expected to rise rapidly from YTLPower's AI data centre & Wessex, as well as Mcement and hotel business.

I forecast EPS may rise easily to 25 sen by FY2026, based on the projection from Macquarie on YTL Power earnings hitting over RM4.2 billion in FY2026.

Based on same 20x PER, YTL share price should rise gradually to RM5.00 by 2026.

Based on Q1 result, AEON registered operating cashflows (before working capital changes and capex) of RM133.3 million, annualised to RM533 million or 38 sen per share.

Setting aside say RM100-120 million for capex to renovate 3 shopping malls in FY2024, AEON will have free cashflows of RM420 million or 30 sen per share, which could well support a dividend payout of 12-15 sen.

At 7% free cashflow yield, AEON should be worth RM4.28 per share.
At 5% dividend yield, AEON should be worth RM2.40-3.00 per share.

Big funds have sapu the roadblocks at 1.39-1.40.

As the previous CFO Grace Lee has resigned, she was the one blocking my proposal then. Now the MD has been taken over by the founder's son, I hope the new top management will consider more options to enhance shareholders' value and capital structure of the company.

ya it is totally unfair to retail investors like us to suffer such a discount to fair value of the call warrant. Normally call warrants should be trading at most at 1% or fair value, often at 1%-5% premium given that it still has over 3 months before expiry

@Alex Kho, good write-up on KSL.

KSL is not only trading at PER of below 5x, but it has plenty of land in Johor which still carries at very low book value.

Looking at how land price in Kulai/Pulai being snapped up by data centre developers at prices as high as RM138 psf, I think KSL will see huge revaluation gains for its total 578 acres of land around Pulai.

Ya, YTL Power will release Q3 results next Thursday.

Expect decent set of results with net profit around RM800 million +/-5%, which will be inline with latest Maybank's revised projection for FY2024.

Major road blocks at RM1.39-1.40 but I expect these to be taken out soon after short term traders and insiders exit positions.

The big buying yesterday and this morning indicate big funds buying on AEON after the surprisingly strong Q1 profits which are re-rating the stock.

@mmk79, ya the issuing bank CIMB seems to be purposely setting the computer orders for C28 at a big discount to the fair price of RM0.240 at mother price of RM1.39.

I have filed an official complaint with Bursa, and expect Bursa to initiate actions against CIMB within 2 trading days.

Maybank research is the latest research house to upgrade YTL Power, raising target price from RM4.00 to RM5.40.

While the analyst considers that PowerSeraya's earnings are peaking in FY2024, he raises PowerSeraya's earnings for FY2025 and FY2026, conceding that the earlier downgrade was premature and PowerSeraya earnings will not drop as drastically as in previous reports.

But he is skeptical of the AI data centre busines, giving little earnings projection to YTL Power.

Yet, he concurs with my earlier view that YTLP's utilities businesses (PowerSeraya, Wessex, Jawa Power, Jordan Power) will be able to sustain a net profit of above RM3.0 billion every year for next 3 years.

Hence, I expect Maybank to upgrade further as YTLP's AI data centre business gains traction in coming months.

@Raymond, the AI data centre business model is a high tech business with reported payback period of 3 years, so as the pricing of AI chips get higher, the capex for building AI data centres will be bigger and AI data centre developers like CoreWeave and YTL Power will need to charge the customers higher, usually in terms of US$ per hour per GPU.

CoreWeave is charging its customers in the US at a rate of about US$4.50/hour per GPU for Nvidia H100 GPUs now, based on reported selling price of USD30k-40k per H100 GPU.

Now if Nvidia is selling its latest Blackwell GB200 GPUs at USD70k to 80k per GPU, then these costs will be passed on by AI data centre developers to the users like big clouds. Assuming other operating costs (electricity, water, manpower, admin overhead) remaining the same, the pretax profit will get an outsized lift. For instance:

H100 GB200
Price 30-40k 70-80k
Revenue US$1.0b US$2.0b
Opn costs US$0.3b US$0.3b
Depreciation US$0.5b US$1.0b
Pretax profit US$0.2b US$0.7b

Good closing for AEON after reporting a good set of results yesterday.

The massive insiders selling has been well adsorbed with total volume exceeding 40 million.

Another record closing for MCement today. Congratulations to those who still hold on.