@harvest6138, I also cannot find monthly data on electricity consumption in Singapore but I have got monthly data on electricity generation (which is about 4.6% higher than consumption on average).

First 6 months of electricity generation in 1H 2023 was 28,241 GWh vs 28,377 GWh in 1H 2022.

July + Aug 2023 electricity generation totals 9,877 GWh vs 9,874 GWh in Jul-Aug 2022.

@harvest6138, there will certainly be the case. A good management always tries to innovate and diversify income base.

We see that PowerSeraya has already turned around from losses just 2-3 years ago to making good decent profits. Wessex Waters is suffering from temporary setbacks of high inflation and high interest rates in the UK, but will certainly bounce back as soon as April 2024.

I see that Yes 5G business segment is making good progress in capturing more customers and expect this segment to start making profits as soon as this Q1 FY2024.

Next, the 1st phase data centre park will start contributing profits from Q1 next year.

Then the digital bank venture with SEA will be able to make profits within 2-3 years, sooner or later, as demonstrated by SEA Group's own digital bank which already achieved EBITDA positive early this year.

More will come from subsequent phases of green data centre jobs, Selangor WTE plant from 2026, potential new solar power bids in next 5-7 years, potential RE export to Singapore etc.

I am sure YTL Power management team is always on the look out for good M&A opportunities as well, as we can see its entry into Ranhill Utilities which itself is a good strategic move.

Finally after 2 quarters of false start

For longer term investors like myself, I always love dividends, especially those stocks that give dividend yields higher than FD rates and EPF dividend rates. These form important passive income to me as well as providing a key support to long term share price.

Not to worry. Some traders prefer not to have dividend as share price will adjust down after dividend goes ex. Let these traders sell off their short term holdings then share price will have meaningful rebound.

I see RM2.18 as a strong support.

I think MLFF project should be under YTL. Have they got it?

PowerSeraya's retails market share should be maintaining at steady level in past few quarters as there was no new generating capacity coming into the market. The only thing different was that PowerSeraya has acquired Tuaspring earlier this year, so PowerSeraya now has bigger capacity to sell through its retails arm.

@kiasu9583, PowerSeraya earnings are not directly linked to USEP price fluctuations, as over 95% of its revenue is locked in through retails contracts and vesting contracts. No doubt USEP has come down a bit in Jul-Sep quarter compared to highs in April-June 2023 quarter, that should only affect a small quantity of long generation into the pool, no big impact.

@goody99, each of the growth items in my list above would provide meaningful earnings contribution of over RM100 million a year to several hundred million ringgit a year.

As the company has indicated before, the 1st phase of green data centre would contribute profit before tax of around RM100 million a year, so if the company can secure more green data centre jobs to fill up the 500MW capacity at Kulai site, earnings contribution from data centre segment would jump by 7 times. Once the project debts associated with these data centre jobs are fully repaid in 10-15 years, the project operating cashflows from all these data centre jobs would exceed RM1.0 billion a year.

Wessex Waters will turn in substantially higher earnings from 2025 onwards after it secures another 2 rounds of water tariff hikes in April 2024 and April 2025, and after its RCV expands to beyond 4.0 billion pounds sterling then. Remember Wessex Waters used to contribute PBT of over RM800 million a year just few years back. With the expanded RCV, I won't be surprised if Wessex would contribute PBT of over RM1.0 billion a year from FY2026.

The potential solar power projects to be secured in Malaysia and potential RE export to Singapore will be a volume game, providing decent low teens returns but low risks. As a simple guide, a 1000MW solar power project secured locally will contribute EBITDA of over RM300 million a year.

Foreigners reversed to selling position in October. As the ringgit depreciated by 5.6% MoM against the dollar and 10-year US treasury yields rose 100bps to 4.92% from 1 August 2023, foreigners completely reversed the purchases of RM2.2bil equities over 3 months for the period July-September 2023 in October (Exhibit 6-8). They were net sellers mainly in financial services (64%), consumer products/services (27%) and energy (4%) involving Hong Leong Bank, Maybank, Public Bank, RHB Bank, CIMB, IHH Healthcare, Malaysian Airports, PPB Group and Nestle (Exhibit 2). However, foreigners bought into YTL Corp, YTL Power, Inari Amertron, Sunway, Sime Properties, Boustead Plantation, Gas Malaysia and IJM Corp.

from Am Research

Foreigners reversed to selling position in October. As the ringgit depreciated by 5.6% MoM against the dollar and 10-year US treasury yields rose 100bps to 4.92% from 1 August 2023, foreigners completely reversed the purchases of RM2.2bil equities over 3 months for the period July-September 2023 in October (Exhibit 6-8). They were net sellers mainly in financial services (64%), consumer products/services (27%) and energy (4%) involving Hong Leong Bank, Maybank, Public Bank, RHB Bank, CIMB, IHH Healthcare, Malaysian Airports, PPB Group and Nestle (Exhibit 2). However, foreigners bought into YTL Corp, YTL Power, Inari Amertron, Sunway, Sime Properties, Boustead Plantation, Gas Malaysia and IJM Corp.

From Am Research

@Abcdefg123456789, you are most welcome. We are here to make big money, not to insult each other.

@pang72, Ranhill does not control Sabah electricity but has the largest gas fired power plant in western Sabah with 380MW. The proposed new electricity interconnector to link the power source in western Sabah to eastern portions will enhance power generation by Ranhill gas plants.

Ranhill was cheap before the news, trading at forward PER of just 7x, with operating cashflows of over 15 sen per share, vs share price of 60 sen in past 1 month

Good move by YTL Power. It is a direct path to gaining control to the prime water concession in Johor

@probability, yes we are enjoying the best of both worlds by staying in Malaysia and investing in YTL Power.

See the peak demand grew by an astonishing 8% from 7.3 GW in Feb 2023 to 7.9 GW in May 2023. That's what I have been calling for since last year that Singapore electricity supply is in extremely tight situation. This will continue for another 2 years until the new gas plants from Keppel & Sembcorp comes online in 2026. Even these two new plants may not be sufficient to meet the surging peak demand built up over next 2 years.

Even if we use a lower peak demand growth of 5% p.a. (vs 8% in past few months), Singapore peak demand will increase by almost 800MW by 2025 and by 1.2GW by 2026, so the new 1.2GW from Keppel and Sembcorp will be just enough to meet the expected peak demand increase in next 3 years to 2026.

Yes @Cryptolover, this is very attractive price to accumulate for long term investment.

Strong operating cashflows of over 30 sen per share every year can support dividend payouts of at least 9 sen to 15 sen a year, giving potential yields of 5% to 9%

Ammonia can be used for power generation, fuel replacement for coal in cement plant or other heavy industries and for bunkering fuel.

Singapore is moving fast on this initiatives, while Malaysia is still only talking on drawing board stuck with Tenaga

@cgtan2020, ammonia can be produced 100% green by using solar power or hydro power, and is used as a green fuel to replace high carbon fuel like coal, heavy fuel oil and even natural gas. It fulfills the green agenda or ESG requirements of many MNCs.

The other advantage of ammonia is that it is easier to store and transport, easier than green hydrogen.

The other advantage is cost, the cost of ammonia production is more or less fixed for decades once the capital costs for the solar power or hydro power and ammonia production plant are locked in. Hence it can be a cheaper fuel option when oil & gas prices are high. My own estimate is that the cost of generation using green ammonia may be cheaper than gas generation when brent crude oil price is above US$85-90/bbl.

@cgtan2020, this new ammonia development project in Singapore is potentially a big contributor to future earnings of YTL Power if PowerSeraya wins it.

It will be Item No. 11 in my list above to ensure earnings continuity for YTL Power beyond FY2025

@Alex Chua, that would be what I thought to be a win-win situation for both Nepco and Attarat Power. The PPA terms should be honored as it is, and Attarat could sweenten the deal by installing solar power and selling the extra power to NEPCO at a much lower tariff say US 7.0 cents/kWh, such that the blended tariff would be below US 10 cents/kWh which is the gas tariff at current gas prices.

@harvest6138, you are most welcome. Let's make big money together. Good luck

Though we are disappointed with the government actions (or lack of) so far, I still believe at the end of the day the government and the various industry players will do the right thing to make our national agenda a priority and realised. Lots of patience is required, especially for the present PM to strengthen his political grip so that we shall have political stability for at least 3 to 4 years for the various right policy to implement.

Meanwhile, we can fall back to overseas contributions (PowerSeraya, Wessex Waters, Jordan Power and Indonesia JawaPower）to continue contributing the bulk of the profits to YTL Power in next 2 to 3 years before the local mega projects start to kick off.

@harves6138, I have since updated the earnings projection in my subsequent update reports, the latest being this one:

https://klse.i3investor.com/web/blog/detail/dragon328/2023-08-24-story-h-241866920-YTL_YTL_Power_Electrifying_Up_to_Record_Profits

PowerSeraya earnings have indeed exceeded my wildest projection back in April 2022, then gross margin projected max at S$450 million and PBT of S$371 million a year. Now PowerSeraya is doing a base PBT of S$232 million based on my last estimate in end August 2023. Now I understand that total debts in PowerSeraya have almost halved to just above S$1.0 billion and so interest expenses are also halved now, pushing PBT towards S$240 million.

Then you will need to take into account of the strong Singapore dollars which just broke RM3.50 days ago.

Our government should stand firm on what they believe is good for the industry and businesses, like what Singapore government is doing. Singapore EMA believes that setting up of a new Gasco for centralised purchase of natural gas will be good for the power sector in Singapore and consumers, and it will push for the realisation after proper engagement with industry players.

Look at what our government has been doing here. Even engaging Tenaga to finalise the policy for RE export is going nowhere, hence we are missing out on the opportunity to participate in the RE tender by Singapore closing in end Dec.

There is opportunity out there and there is industry interests from private sector (YTLPower, Malakoff, Solarvest etc) to participate, but our government policy and bureaucracy has killed off those good opportunities.

as you pointed out, our 5G development is also in a mess, interrupted by various lobby groups and industry veteran like Maxis who still refuses to sign up for DNB. Even though DNB might have incurred higher costs than the second network provider yet to come, but this is our national 5G development plan already started from previous government and continued on by the present government. Industry players should try to support as much our national agenda for rolling out good 5G services, and not insist on their allegation that they can get cheaper 5G network provider.

If everybody signs up for DNB, then the cost of access to 5G services will be the same for all 5G players and it will be a level playing field. Unfortunately some industry veteran feel that their veteran and lucrative position should not be challenged by new players, hence trying to delay the implementation of DNB services, despite numerous attempts by our Communications Minister to urge for finalisation of equity subscription to DNB.

@probability, yes the swift to renewable energy is unstoppable, but politics and Tenaga policy are the main obstacles stopping Malaysia's swift to renewable energy.

To achieve installation of new 8,000MW of solar power by 2030 and another 25GW by 2050 will require massive investments from various private sectors and swift roll-out of public tenders of large scale solar projects by the government. So far we are not seeing much actions by the government besides just talking big on the RE plans, I guess the bottleneck is at Tenaga who is playing hard ball with the government trying to secure as much such new solar projects as possible. But Tenaga's own capital investment requirement is already super high for strengthening of national power grid, totalling RM180 billion over next few years. I think the government needs to stand firm and play tough games in order to achieve its RE plans.

I am not too sure of Brabazon project progress but I do not expect YTL Power to aggressively launch new projects there as UK interest rates are still high and property market is weak. I would expect the property market will be conducive enough from 2025 for more significant launches.

@Alex Chua, yes there are plans to ensure continuation of strong earnings for YTL Power to continue beyond FY2025:
1) WTE plant to start from 2026
2) Digital bank to turn in profit from 2026
3) Green data centre 1st phase to start contributing profit from FY2024
4) Subsequent phases of green data centre to contribute profits from FY2025
5) Wessex Waters earnings to rebound from Q4 FY2024 after next water tariff hikes
6) Wessex Waters RCV to expand substantially for next regulatory period from April 2025 to ensure earnings to expand meaningfully from FY2026
7) Potential win of new solar power projects in Malaysia as Malaysia plans to roll out some 8,000MW of solar power projects by 2030 and another 25,000-30,000MW by 2050
8) Potential export of RE to Singapore from 2027
9) Meaningful earnings contribution from UK property development from 2026 once interest rates there retreat to normalised levels
10) Potential win of the new gas plant tender in Singapore to expand PowerSeraya earnings from 2028

The digital bank JV with SEA Group should be on track for commercial roll out in Q1 next year.

The experience of SEA Group in its own digital bank business (which has turned EBITDA positive) will help in making this JV a profitable venture in 2-3 years.

Why I said this is a positive development is because this new measure will help gencos to secure sufficient gas supply for years to come and at terms more acceptable to gencos, as it will be negotiated in bulk by EMA's Gasco on behalf of all gencos.

After the expiry of first LNG supply tenor in April 2023, each genco needed to go source for own gas supply and to negotiate with the oil & gas majors for a relatively small quantity of gas sufficient for each own consumption. Each genco did not have much bargaining power and hence could not secure good terms for the gas supply, hence such feedback to EMA has given rise to the proposed set up of a centralised purchase entity Gasco.

As EMA is calling for new tenders for new gas fired power plants to be built from 2028, the new gas plants will need gas supply but the winner of the bid is not known yet at this juncture. Gasco can then step in next year to secure the necessary gas supply for the new gas plant for whoever the eventual winner of the bid. That will take away a major risk for bidder to participate in the upcoming tenders. If PowerSeraya participates in such tender, it will not need to worry about sourcing for new gas supply, but focusing on getting the best technology with high efficiency.

Hence this is a good development for the electricity industry in Singapore as a whole.

Due to reason 2) above, PowerSeraya will have less chances of making extraordinary profits from long generation into the wholesale electricity market, which typically contributes less than 5% of overall profit. That may be the only impact.

As the bulk of PS profits come from the retails electricity market and vesting contracts, so such extraordinary profit from long generation into the wholesale market if disappearing will not cause much dent to PS overall profit.

This can be validated from the upcoming results for the July-Sept 2023 quarter during which TPC was already in place to curb pool price spikes.

@xiaochen, this centralised purchase of natural gas will have no significant impact on PowerSeraya for a few reasons:

1) Existing gas supply contracts are allowed to continue until expiry. PowerSeraya has secured relatively cheap gas supply at least until Dec 2025, some extended to 2028, so this new measure will have no impact on PS at least for FY2024 and FY2025 and 1H FY2026

2) Once it is implemented, all gencos will have access to same gas supply and pricing, which will be back to prior arrangements before 2023 April when all gencos got the same gas supply from Malaysia and Indonesia at similar pricing and LNG from BG. All gencos will have similar gas cost structure, and will only compete on plant efficiencies.

3) EMA has no control over retails pricing which is itself a competitive market. EMA will be able to control gas pricing to gencos, which will help stabilising input costs to reduce occurrences of price spikes in the wholesale electricity market, but it will have no impact on retail electricity market which depends on supply and demand

The day to day share price fluctuations are hard to predict and hard to explain, affected by many factors mostly speculative actions. As long as the company fundamentals remain strong, earnings higher than last year, dividend on track for 9.0-9.5 sen for FY2024 (which will provide dividend yield of over 7% at share price of RM1.28), I see good chances for YTL share price to rebound in coming months to retest previous high of RM1.71.

That's all I can say. Have a good evening and good luck to all.

As of 20 Oct 2023, the net short position on YTL is zero, meaning that shorties have closed out short positions on YTL as its share price has corrected substantially (over 25% from a peak of RM1.71 to now RM1.26), so the downside is limited.

From the chart, I see RM1.28 as a good support which is the 21-week moving average, and expect the weekly close on this Friday to be supported at this level.

Yes there may have been some panic selling in past few days on YTL shares, but I don't see any change in fundamentals. The earnings outlook is still good for next few quarters, operating cashflows remain strong and YTL is on track to distribute RM1.0 billion for FY2024.

MRT3 project award is still on track by end of the year, and HSR is also on track in the RFI stage followed by meeting with Singapore counterpart end of the year or early next year.

MCement is also on track to deliver stronger earnings in coming quarters driven by strong bulk cement selling price and dropping coal prices, irrespective of whether MRT3 or HSR project will go ahead or not.

There are still a number of unlisted assets under YTL to be monetised or injected into the REIT, after the proposed injection of Hotel Stripes is complete.

The proposed injection of Hotel Stripes in KL from YTL to YTL Hosp REIT for RM138 million has become unconditional. YTL will soon receive cash of RM138 million which will add to its coffer for the proposed RM1.0 billion dividend for FY2024.

I think the recent drops in YTL share price are due to market disappointment on MRT3 project not included in 2024 budget and the risks of Israel-Palestine conflict escalating.

On the first concern, MRT projects are usually not included in the budget as these are Prasarana projects funded off the balance sheet. As the bid validity has been extended to 31 Dec 2023, I think that MRT3 project award may still come out in next 2 months.

On the second concern, I think the likelihood of Israel-Palestine conflicts escalating to regional war is quite low, as it will not serve US interests well. I expect it to be contained within Gaza strip but only time will tell. Foreign fund managers will sit on the sideline until the situation becomes clearer. Meanwhile, I suspect it is the local shorties who have been pushing down YTL and YTLPower shares for short term gains. However, such net short positions are reducing every week as share price gets lower. Soon the shorties will have to cover their positions.

@mikekim, thanks for the info. It is another good development for PowerSeraya to maintain its top retailer position in Singapore.

@cgtan2020, hedging will still be required to hedge against gas costs and FX fluctuations. That has been the core policy in PowerSeraya not to take risks on gas price movements. It will ensure a steady and secured retails margin.

What they do normally is that when a retails contract is secured say for 12 months at a certain price say S$240/MWh, then PowerSeraya (and all gencos) will enter into financial hedges on the required gas costs by hedging the forward crude oil prices and FX for the 12 months ahead at S$160/MWh so that the retails gross margin is secured at S$80/MWh for this volume of retails contract secured. So irrespective of how crude oil and gas prices move in next 12 months, gencos' profit margin for the secured retails contracts are secured.

If the gas prices are negotiated lower, then gas costs can be hedged at lower price say at S$130/MWh and the retails contracts can be sold at lower price too say at S$210/MWh such that the retails gross margin is maintained at S$80/MWh.

If the gas prices go up and gas costs are hedged at say S$200/MWh, then retails contracts will be sold at S$280/MWh such that retails gross margin is still maintained at S$80/MWh.

As long as the gas costs secured by all gencos are more or less the same, then the retails contract electricity selling price will be about the same, and the retails gross margin about the same too.

@cgtan2020, that is potentially a positive development for all gencos and consumers in Singapore. When the government aggregates all the gas demand from gencos, they can negotiate for better deals. What it means is that it will provide a stable and more secured gas supply for all gencos, and also a level playing field for all gencos.

@harvest6138, agree with what you said above. Short term share price fluctuations are unpredictable, subject to many factors including short selling and speculation. But over medium and long term, share price movements always reflect company fundamentals.

If YTLPower can deliver good earnings like 8.0-10.0 sen EPS in next few quarters, markets will sooner or later appreciate its earnings resilience amidst so many external shocks.

@cgtan2020, what is the latest net short position for YTL and YTL Power?

@harvest6138, I think it may be a bit tough for YTLPower to achieve the same net profit level as in last quarter Q4 FY2023 which was boosted by 2 extraordinary items: 1) super high wholesale electricity prices in Singapore which enabled PowerSeraya to pocket good long generation profits, 2) Jordan power venture recognised some pent-up construction profit after the 2nd unit was commissioned in April 2023.

These 2 extraordinary items may not recur in the coming Q1 FY2024, but the "normalised" profits will be very good, better than most analysts' projections, I hope.

I am not sure of which price review plan you were talking about, pls elaborate.

This electricity tariff is the price offered by incumbent MSSL for the non-contestable customers or retail customers who have not switched to a genco retailer. It is the default tariff, and also the reference price for vesting contracts allocated to gencos.

CIMB research today reports that
The RM200bn funding allocation for green projects is clearly encouraging given
the massive investments under the NETR. Just to give a sense, total investments
worth RM210bn-RM240bn are required between 2023-2029 and RM460bn-
RM480bn between 2030-2039 to meet the countries NETR objectives, according
to the government’s projections. As such, the funding allocation should somewhat
ease concerns over financing availability for such ambitious investment plans.
The continued focus on CGPP and TPA model are, in our view, encouraging signs
that indicate that the government is working towards coming to a landing on the
mechanism for electricity exports.

Maybank research in a note this morning reported that
"Sizeable Government and financial institutions fundings. The MYR2b funding by the Government was earlier announced during the launch of the NETR 2nd phase in Aug 2023. We understand that it will be a seed fund to finance energy transition projects that are marginally bankable or yielding below-market returns e.g. in the electric vehicle (EV) value chain, hydrogen as well as carbon capture, utilisation and storage (CCUS) technologies. Meanwhile, financing funds of MYR200b from the financial institutions would support the 10 flagship catalyst projects of the National Energy Transition Roadmap (NETR)."

The RM200bn funds from the financial institutions will help tremendously to push forward the renewable energy projects, particularly the massive solar power plans (new 7,000MW projects till 2030). Hopefully the government / Energy Commission will soon roll out new large scale solar power tenders for private developers like YTL Power & Malakoff to participate. The government cannot rely 100% on Tenaga Nasional to install all the solar projects required as funding will be an issue and timing another.

Again in Budget 2024 announcement last Friday, there was no detail as to how the proposed luxury good tax will be implemented, when it will start and above what price threshold the luxury goods will be taxed.

The only new info available is that the new luxury good tax shall be 5% to 10% to be imposed on luxury watches, jewellery and fashion items.

As most of Bonia products (handbags, watches, clothes etc) are priced below RM1,000 each, I do not expect the luxury good tax will be imposed on many Bonia products. Even if some products get taxed, I think Bonia will be able to adsorb or pass on the 5% or 10% tax, or re-priced the products, or introduce more products not subject to the new tax. Overall, I do not expect Bonia sales will be impacted much.

Still looking forward to good sales in coming Q2FY2024 and bumpy dividend for FY2024

CIMB research reported that "While there was no mention of MRT 3, similar to the 12MP mid-term review, we believe this project is still on the cusp of awards with the tender validity extended to end-Dec 23 and strong endorsement from the Minister of Transport. We
estimate that the three large civil main contractor (CMC) packages are worth a
combined c.RM30bn (total project value of RM40bn-45bn including land
acquisition, systems and rolling stock). In our view, the main beneficiaries are
Gamuda (for CMC303 tunnelling works), YTL (lowest bidder for CMC302) and
MCement."

@myloh123, I don't think YTLPower will be affected by the Global Minimum Tax as all of its main subsidiaries operate in countries with corporate tax rate higher than 15%