Dear Mr. OTB, you are most welcome. I have not done much, it is your own analysis and faith in your own decision to have stayed invested in YTL Power until now. Applaud yourself.

Singapore dollars surged to almost RM3.60 yesterday before settling above RM3.50.

If this momentum continues to the end of this month, we can expect another set of stellar earnings contribution from PowerSeraya for this Dec quarter

Of course, the key driver for Genting today is the interest rate pause by US Fed yesterday and the projected 3 interest rate cuts for 2024 as signaled by Powell.

Genting finally breaks up RM4.70, patience has paid off.

Singapore dollars surged to a high of RM3.5897 yesterday before settling at RM3.5016 making a new record high against the ringgit.

If this momentum continues to the end of this month, we can expect a record profit contribution from Genting Singapore for this Dec quarter which is seasonally a strong quarter

Singapore dollars surged to a high of RM3.5897 yesterday before settling at RM3.5016 making a new record high against ringgit.

If this momentum continues to end of this month, we can expect another set of stellar earnings contribution from PowerSeraya to YTL Power.

@harvest6138, though this news is few months old but it is still correct in the sense that water companies in the UK have all submitted their aggressive capex plans for the next regulatory period from 2025-2030. In returns, water companies are asking for substantial REAL increase in water tariffs to compensate for the substantially higher capex required to fix the various flooding, sewerage and environmental issues there.

Wessex Waters have asked for a 30% increase in REAL water tariffs for 2025-2030, if approved the nominal increase in water tariffs will likely be higher than 30% given inflation adjustments every year going forward.

Ya, RM6.95 will definitely come, it is just a matter of time. Be patient.

I bought in Genting up to RM5.00 early this year but didn't feel depressed at all when its share price dropped to RM4.00. Instead I added more as I strongly believe Genting will soon break up RM5.00 soon. It is grossly under-valued now.

Its stakes in Genting Singapore is higher than its own market cap now, it means investors are getting the Genting Malaysia business, Genting Las Vegas, Genting Plantation, oil & gas business for free!!

@ChloeTai, no need to feel depressed. Have faith and you will be rewarded handsomely.

Genting will have its turn for a great rally. Genting Singapore broke up SGD1.00 this morning, investors are slowly waking up to the huge potential of its expansion programmes Genting Sentosa 2.0.

Another new high!

Those who read my article last week to buy a ticket and get on the YTL train are now sitting pretty on 20% paper gain. Just sit back and relax to let the journey continue.

But don't chase high, always aim for long term investment holds.

@Agjl, well said, fully agreed.

We are all here to make decent money from investments with our hard-earned money.

Have faith and hope Christmas come early to all!

https://www.edgeprop.sg/property-news/luxury-ski-chalets-prices-have-gone-44-highest-2014?utm_source=WeekdayEDM&utm_medium=email&utm_campaign=FREE

She adds that Niseko remains the top choice for skiing destinations in the Asia Pacific due to its location proximity, world-renowned powdery snow, year-round resort, retail, world-class restaurant amenities, and favourable dollar-to-yen exchange rate.

@keyman, that's right as YTL YTLPower have shown good progress in earnings rebounds and new projects, while Genting results had been disappointing until the recent Sept 2023 quarter, so it is just a timing issue.

My other stocks have mixed performance too, like BPlant is being taken over so no more upside but I have got close to 100% gain there. IGBB is doing well with share price touching year high, already up over 60% since I first recommended in Aug 2022. I have given up on AEON as the management does not seem to be proactive enough.

Now Genm Genting may see good catalysts ahead.

UK house prices rose for the second month in a row, according to one of
Britain’s biggest mortgage lenders, in a further sign that a lack of properties
for sale and cheaper borrowing costs are underpinning the property market.
Halifax said the average value of a home rose 0.5% in November to £283,615
(RM1.32mn), following an upwardly revised 1.2% gain in October. It left prices just
1% lower than a year earlier and roughly 3.5% below where they peaked in 2022.
(Bloomberg)

This is good for YTLPower's Brabazon property projects in Bath

The Bank of England will keep Bank Rate at 5.25% on 14 December and
through the second quarter of 2024, a Reuters poll showed, although a slim
majority of participants said risks were tilted towards the first cut coming
earlier than expected. British inflation cooled more than expected to 4.6% in
October from 6.7% in September yet economists as a group now expect only a
25 basis point cut in the third quarter compared to 50 basis points in a
November poll. (Reuters)

This will be good for Wessex Waters

Ya hopefully good news will keep flowing in for Genting in 2024, but a lot will also depend on whether the management will do the right things

@pang72, haha I have still been in the game since Jan. It is just that the market conditions were not ripe yet in 1H but I see great catalysts ahead for Genting.

Yes Genting Singapore will lead a higher growth in tourists receipts and earnings over next few years. As I forecast earlier, Genting Singapore would achieve EBITDA of S$1.4 billion for 2024. In the latest Sept 2023 quarter, it achieved EBITDA of over S$350 million, annualised to over S$1.4 billion better than my projection.

@KingKKK, seriously I do not know about the game plan of YTL on Ranhill. As they have got over 20% stakes, so YTL can equity account Ranhill's profits. Whether YTL will continue raising its stakes, I do not know but going by their long term investment strategy, YTL would typically try to get a controlling stake. How would they get there, I have no idea.

As for PBA, I am not familiar with its financials so no comment.

@Income, ya it is a bit long. If you don't have time, just read the First Boom & Second Boom then the last part.

The middle parts have been covered largely in my previous articles.

@Permutation, this is a tough question. I leave it up to you.

FYI, I have both stocks so I don't have to think hard to choose.

@pang72, MCement is definitely under-valued despite the recent run up. CIMB was quick enough to see the potential as demand for cement is picking up strongly from Malaysia and Singapore.

@Plantermen, thanks for the info. I am not quite familiar with KL city centre and have not been to TRX. Will explore later.

https://klse.i3investor.com/web/blog/detail/dragon328/2023-12-06-story-h-213241744-YTL_The_Growth_Story

For leisure read

https://klse.i3investor.com/web/blog/detail/dragon328/2023-12-06-story-h-213241744-YTL_The_Growth_Story

for leisure read

https://klse.i3investor.com/web/blog/detail/dragon328/2023-12-06-story-h-213241744-YTL_The_Growth_Story

Food for thoughts over lunch

https://klse.i3investor.com/web/blog/detail/dragon328/2023-12-06-story-h-213241744-YTL_The_Growth_Story

Food for thoughts over lunch

@Jonathan Keung, can you please share anything interesting in YTL management replies to queries during the AGM?

As @observatoty rightly pointed out, Wessex's RAB of 4.1bn pounds is funded by debt and equity. Currently the 3 listed water companies in the UK are trading at low valuation of 1.1x to 1.2x RAB. Hence it is reasonable for Hong Leong research to value Wessex at 1.2x RAB now.

Please note that water companies were trading at much higher valuation of 1.5x to 1.7x RAB few years back before COVID and before the high inflation / interest rates in the UK.

If we take the current 1.2x RAB, Wessex is valued at 1.2 x 4.1bn - debt 2.4b = 2.5bn pounds or RM14.6bn

I have suggested for Wessex to consider an IPO after 2.25 when inflation in the UK subsides and valuation may go up to 1.6x RAB. Then Wessex may be able to get a valuation of
1.6 x 4.5b - 2.7b (debt) = 4.5b pounds or RM26.1 billion

Just think about it, come 2030 when Wessex' capex plans get materialised, its RAB will expand to 8.0 billion pounds, and debts will increase to 2.4+2.7 = 5.1b. So at 1.6x RAB, Wessex equity value will expand to 1.6 x 8.0b - 5.1b = 7.7 billion pounds or RM44.7 billion

As for Wessex RAB expansion, it really depends on how much capex is approved by Ofwat and how much the company spends. And how much capex it spends depends on inflation in the UK to some extent.

FYI, Wessex has just submitted to Ofwat a capex plan of 3.5 billion pounds for the next regulatory period from April 2025- Mar 2030. Normally Ofwat will push back on water companies' capex programmes in order to lower the water tariffs, but in this round, Ofwat seems to be supportive of the water companies' capex plans as it faces criticism on sewerage overflow and flooding issues in recent months.

If this capex plan gets approved, Wessex will expand its RAB from currently 4.1 billion pounds to about 4.5 billion pounds by Mar 2025 then expand by another 3.5 billion to almost 8.0 billion pounds by Mar 2030.

Then assuming the WACC approved for water tariff determination remains the same, we shall see Wessex revenue and earnings base doubling up by 2030.

The fact that analysts in Singapore are generally upbeat on Keppel and Sembcorb earnings for next few years, and investors ascribe a PER of 10x to 12x to them, speaks loud on PowerSeraya's earnings for next 2-3 years.

It is only that local analysts who are not familiar with the Singapore electricity market tends to give ultra conservative projections that PowerSeraya earnings will be halved in 2025 from current levels.

On PowerSeraya strong earnings, the management could only give assurances for next 2 years based on the longest retails contracts they have secured. That will take us to 2025. Really beyond that nobody can give any promise on earnings, as it will depend on whether the Keppel and Sembcorb new unit can get commissioned on time and if the peak demand will continue to be as strong. You will need to talk to the industry players in Singapore to get a good sense of how it will pan out. A good guide is to get analysts reports on Sembcorb and Keppel and their earnings projection for these 2 Singapore gencos who regularly update analysts with their generation and earnings projections.

@observatory, the regulated return of 9% for telecommunication refers to the regulated return for DNB shareholders who are the 5 telcos and the government. DNB will earn a fixed regulated return on the capex it invested to roll out the 5G network.

For the 2nd 5G network, as the government already said it would offer the same wholesale access prices so it would have no impact on telcos who are using the 1st network DNB. Maxis was pushing hard for the setting up of a second 5G network as Maxis thought it could do it cheaper than DNB and hence could have lower network access fee, but the government insisted on the same wholesale prices before it approved the second network. Maxis had no choice but also to subscribe to similar level of equity stakes in DNB.

The whole idea is to provide a level playing field to all telcos in the 5G game.

Bonia Q1 FY2024 result is not too bad with core net profit close to RM9 million excluding extraordinary items. As expected, an interim dividend of 2.0 sen is declared.

The topline remains resilient while profit drops more substantially due to higher salary costs and operating expenses. With a gross profit margin of close to 60% and EBITDA margin close to 25%, Bonia should be able to ride through the inflationary pressure, I believe.

Looking towards a bumpy final dividend come June 2024

@xiaochen, thanks for the news link.

Indeed data centre park needs lot of water supply apart from consuming lots of power. The state assemblyman said the anticipated water supply to the Kulai data centre park will increase by 160% by 2028 when the 2nd phase of data centre completes.

This implies the second phase data centre has a capacity of 1.6 x 72MW (1st phase) = 115MW. Hopefully YTLP will confirm this soon.

@KingKKK, I asked the same question earlier but after further thoughts, it seems like the better time for a listing of Wessex Waters should be after 2025 when its RCV will expand beyond 4.0 billion pounds sterling and UK inflation to have cooled off by then. Pls see the earlier article below for more details.

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

During the upcoming AGM, pls remember to vote for the proposed company share buyback. As YTLP bosses always think that the current share price of YTLP is grossly undervalued, they will buy back shares aggressively at current low prices then distribute them as share dividends later. Company share buyback of 10% then subsequently cancelled out at treasury or distributed as share dividends will reduce outstanding share base by 10% and increase earnings per share by 10%. Good for all!

This counter will definitely reach RM4.00, just a matter of time. I would always advocate for long term investment holds, and you will always win.

I am not suggesting for anyone to enter into short term trades or chase high now, as I am not sure how long this round of consolidation will last. We should not under-estimate the amount of short term selling pressure.

I can see now that smart money is collecting tickets at RM2.35 while short term traders and short term funds take profit

If we look at other stocks under Utility sector:

Petronas Gas Q4 net profit RM477m, Maybank projects full FY2023 NPAT at RM1.8b, market cap at RM34b, PER at 18.9x

Gas Malaysia Q3 NPAT at RM86m, Maybank projects full FY2023 NPAT at RM384m, current market cap at RM4.0bn, PER is 10.4x

MFCB Q2 at RM88m, Maybank projects full FY2023 NPAT at RM386m, market cap at RM3.5b, PER at 9.1x.

The lowest valuation of peers is at 9.1x PER, average at over 20x.

YTLP should be valued at RM3.82 if based on 9.1x PER, and valued at RM8.40 if based on 20x PER.

Another possible reason for some of these local research houses to give a low target price for YTLP is that their investment bank arm may have managed some funds for EPF and sold off half of EPF's holdings on YTL Power. They cannot simply now value YTLP at a target price substantially higher than the price at which they sold EPF holdings on YTLP.

These local banks who have issued call warrants on YTLP but have not fully hedged their positions will suffer badly. Too much gaming will hurt them more, compared to just doing a fully hedged call warrant issuance and earning the upfront 10%-20% premium on issue price

@probability, correct, many of these local analysts are too pessimistic on YTLP earnings projection beyond FY2024, they are expecting PowerSeraya earnings to drop by half or more from FY2023 levels which is ridiculous. I guess this is the only way for them to justify a low valuation for YTL Power. As comparison, these analysts project that international prices will jump up by more than 10% in 2024 to justify a 20% increase in earnings for Press Metal, which itself is hard to justify, given that they already got it wrong with aluminium prices and PMEtal earnings for 2023.

For a non-biased view on YTL Power, I suggest you read the research report from Hong Leong who has not issued any call warrant on YTLP and who has reported fairly the outlook of YTLP over next 3 years based on management feedback.

Another one is Yahoo Finance who has also not issued any call warrant on YTLP. Yahoo has given a non-biased and fair projection of YTLP cashflows in next few years and hence a fair DCF value of YTLP.

@cgtan2020, whether or not PetChem and PMetal are classified as utilities stock, it does not matter lah. Would you invest in a stock purely based on which category it is in?

If we look at YTLP's closest peers Tenaga and Malakoff, it shows the same conclusion.

Tenaga Q3 net profit at RM856m (not much different from YTLP's RM850m), CIMB projects Tenaga full FY2023 net profit at RM3.2b

Malakoff is loss making, no need to calculate at all

Tenaga market cap is now RM57.8bn, hence PER is at 18.1x. It is still trading at over 3 times the valuation of YTLPower.

CIMB values Tenaga at RM12.00 or RM69 billion, based on DCF valuation. It says Tenaga is cheap trading at EV/EBITDA of 5x. If it uses similar valuation on YTLP, it should value YTLP at over RM3.00 per share.

Sometimes these local research houses have own agenda when giving target prices to certain stocks, especially those who have issued call warrants on the stock.

Based on results announced last night from the other 2 utilities companies, I take a simple comparison of their market cap with YTL Power:

Petronas Chemicals - Q3 net profit RM424m, CIMB projects full year NPAT at RM2.2b
Press Metal - Q3 FY2023 net profit RM308, Hong Leong projects full FY2023 net at RM1.2b

PetChem PMetal YTLPower
FY2023 net profit RM2.2b RM1.2b RM3.4b (FY2024 June)
Market cap RM56.6b RM39.9b RM18.8b
PER 25.7x 33.2x 5.5x

Even if I take YTLP actual FY2023 net profit of RM2.0b, I will get a PER of just 9.4x. This shows that the market has significantly mispriced the share of YTLPower.

Both the earnings of Petronas Chemicals and Press Metal are more volatile than YTLPower's as the former depends very much on international crude oil prices and the spreads, while the latter depends solely on international aluminium prices. PetChem net profit is projected by CIMB to drop from RM6.5b in FY2022 to RM2.2b in FY2023, or a drop of 66%, while PMetal net profit is projected by Hong Leong to drop from RM1.42b in FY2022 to RM1.22b in FY2023 or a drop of 14%.

It is totally unjustified for analysts to give a PER of over 20x to PetChem and PMetal while giving a PER of below 6x for YTLPower.

Another set of excellent results!! I think it is a record high quarterly net profit for Wellcall, at least highest since I invested in from 2022.

Free cashflows of RM63 million or 12.7 sen in FY2023 are super strong, enabling Wellcall to declare high dividends of 2.8 sen for Q4.

If these last 2 quarterly results can sustain forward, Wellcall will have even higher operating cashflows for FY2024, which may support total dividend payouts of 10 sen per share or more.

@cgtan2020, thanks for the news link.

It clearly shows that Jordan NEPCO is struggling to find alternative fuel sources. If opting for LNG, NEPCO would incur additional fuel costs of USD63 million a month, or over USD700 million a year. They need YTLP Jordan oil-shale fired power plant more than ever, otherwise the country would face national blackout or incur over USD1.0 billion of additional fuel costs every year.

@Pinky, you just illustrated exactly what I meant. Thanks

@chessgame99, you may be referring to minority interests. YTL Corp books in the entire profit before tax from subsidiaries like YTL Power and MCement, then deduct off the minority interest for stakes it does not own in these subsidiaries

@probability, yes PowerSeraya strong earnings will continue at least to 2026 based on current supply-demand dynamics.

If heat wave hits Singapore again or Singapore economy continues to grow stronger than expected, then peak demand will grow fast and the scheduled new capacity supply in 2026 may not be enough to cater for new power demand and electricity retails margin will stay robust beyond 2026