@Yezzy99108, it is disheartening to see share price dropping every day, isn't it?

You are probably right that we will need to wait till the budget 2024 announcement next Friday to see where the market is heading to.

I suspect the weak market sentiment in these few days is mainly due to the concern on any market disruptive policy to be announced in the coming budget, such as capital gain tax or increased gaming tax or luxury tax or sugar tax etc. Hence we are seeing stocks in most sectors are dropping like Genm, Bonia, Panamy, Nestle, Heneiken, F&N, MSM etc.

@cgtan2020, I have sent the pdf file to you via i3 messenger.

Whether it was a married deal on 15 Sept 2023 does not matter, the thing is that there was a large transaction of 93 m shares done at RM2.08 in last minutes

There has been too much speculative activities on YTLPower shares since August as the share price broke away from resistance 1.38 on 2nd August and went up all the way to a high of RM2.24.

I am not expert on technical charts and I believe technical charts may be deceiving sometimes. So I fall back to fundamentals as always to analyse the share price movements of YTLPower.

As you have seen, YTLPower first saw heavy foreign buying on 21st August when it was first reported for YTLPower to be included into FTSE Asia Pacific index. The share price was chased to a high of RM1.88 on that day with heavy trading volume of 56.6 million shares.

Then on 25th August, one day after YTLP announced the record quarterly profit, again YTLP shares experienced heavy buying with 73 million shares traded. The share price opened at RM1.85, went up to a high of RM1.95 and closed at RM1.88.

On 3rd Oct, Maybank research reported that YTLPower was the stock most bought by foreign funds in the month of September with net purchase of RM254 million worth of shares. Share price of YTLPower traded within the price range of RM1.98 to RM2.24 in September, meaning that the average buy-in price for foreign funds on YTLP was likely to be over RM2.00. This was also evidenced by a married deal of 93 million shares transacted at last minutes on 15th September. So foreign funds bought about 122 million shares of YTLP in September month alone.

YTD foreign funds have bought a total of RM497 million worth of YTLP shares, minus out the RM254m bought in September, foreign funds had bought RM243 million worth of YTLP shares before September. As trading volume of YTLP got heavy only from early August, I presume most of foreign fund buying of YTLP only started from 1st August. The share price of YTLP ranged from RM1.38 to RM2.19 averaged at RM1.78. So I calculate that foreign funds had bought in some 136 million shares of YTLP before Sept at an average price of RM1.78.

Foreign funds once buy in a stock will typically make at least 50% profit before exiting, and seldom exit at a loss. So I would think that RM1.88 will be a strong support for YTLP share price as it was the level foreign funds first bought in bulk on 21st & 25th August.

Then for whatever reason if RM1.88 gives way, next strong support will be RM1.78 level which is the average buy-in price of foreign funds that bought in before September. At RM1.78 level, YTLP share would have given up all gains from the news of inclusion into FTSE Asia Pacific Index and also the announcement of record quarterly profit on 24th August, so the downside would be very limited.

On the upside, I still look at RM4.00 as the target for 2024, based on 10x PER of FY2024 EPS of 40 sen. Before that, I see good chance for Hong Leong tp of RM2.90 to be achieved by end of 2023 driven by positive news below:
1) foreign funds are buying after it is included into FTSE Asia Pacific index
2) foreign funds have bought in at average price of RM1.78 to RM2.08, so a 50% typical gain sought by foreign funds will take it to RM2.67 to RM3.12 or averaged at RM2.90
3) YTLP will likely be included into KLCI Component index stock based on its current market cap, that will prompt more funds buying as exposure to the index
4) YTLP will likely announce quarterly result for Sept 2023 which will beat street estimates by end November
5) A potential turnaround of Wessex Waters in September quarter in the absence of further provision for index-linked bonds
6) a potential re-rating of water companies in the UK after the investment plans for the next regulatory period of 2025-2030 get approved by Ofwat. As illustrated this morning, Wessex's RCV may expand by 50% to GBP6.0 billion by 2030 and valuation may jump to GBP5.7 billion or RM32.7 billion by 2030
7) potential new data centre jobs secured in next few months

By 2025, Wessex Waters' RCV will reach GBP4.0 billion and net debt at GBP2.6 billion.
At 1.2x RCV, Wessex will be worth 1.2 x 4.0 - 2.6 = GBP2.2 billion or RM12.6 billion
At 1.6x RCV, Wessex will be worth 1.6 x 4.0 - 2.6 = GBP3.8 billion or RM21.9 billion

By 2030, Wessex Waters' RCV will reach GBP6.0 billion and net debt at GBP3.9 billion.
At 1.2x RCV, Wessex will be worth 1.2 x 6.0 - 3.9 = GBP3.3 billion or RM19.0 billion
At 1.6x RCV, Wessex will be worth 1.6 x 6.0 - 3.9 = GBP5.7 billion or RM32.7 billion

https://www.msn.com/en-gb/money/other/water-bills-set-to-soar-by-up-to-44-by-2030-see-how-much-extra-your-water-firm-wants-to-charge/ar-AA1hDvbV

Wessex Waters to raise water bills by 30.9% by 2030. For the big investments for regulatory period 2025-2030, water companies in the UK will raise water bills by over 30% in next 5 years.

Wessex Waters RCV is expected to reach GBP4.0 billion by 2025, and it is expected to spend some GBP2.0 billion over the next 5-year regulatory period from 2025-2030, hence RCV will rise by 50% to almost GBP6.0 billion by 2030.

Wessex Waters' annual revenue is almost RM4.0 billion, so a 30.9% increase in water tariffs will increase its annual revenue by RM1.23 billion, offset by the increased interest expenses of GBP1.3bn x 5% = RM371 million a year, Wessex Waters will enjoy an increase of RM859 million in gross profit a year by 2030 (ignoring the increase in non-cash depreciation charges and assuming the pent-up adjustment in water tariffs will be enough to cover the increase in other operating costs).

Good closing today and for the quarter end. What an eventful quarter!

As announced in the news above, Singapore electricity tariffs for 4Q 2023 will go up by 0.98 cents/kWh or SGD9.80/MWh, the bulk of the increase will to the generation companies.

This means that PowerSeraya will enjoy an additional gross margin of SGD9.80/MWh for the vesting contracts it is entitled to. The total vesting volume for PowerSeraya is estimated at 3,300GWh x 15% = 495GWh for 4Q, so PowerSeraya shall enjoy an additional gross margin of 495 GWh x SGD9.80/MWh = SGD4.85 million just for the vesting contracts.

Kenanga raises tp for YTLPower by 17% to RM2.50 as it raises net profit projections to RM2.17bn in FY2024 and RM2.06bn in FY2025.

The earnings upgrade is based on sustainable strong earnings in PowerSeraya for the next 2-3 years underpinned by strong retails margin and low gas prices locked in during pandemic time. This is a good update after management briefing.

This paves the way for further upgrade as YTLPower reports strong quarterly result for Q1 FY2024 in Nov 2023, which will show that Kenanga has under-estimated its earnings projection for FY2024. My projection for FY2024 net profit for YTLP is still RM3.2 billion or EPS of 40 sen, so there is a potential scope of 50% upgrade from Kenanga as YTLP delivers the next 2 quarterly results.

@Apple888, the proposed share buyback y YTL Power will be a good move.

Typically it will support the company share price when it gets sold down unreasonably. The shares bought back usually up to 10% of company total outstanding share base will go into treasury and may be distributed to us all as share dividends, or get cancelled out to reduce outstanding shares & hence increase earnings per share.

As stated before, YTL Power operating cash flows are very strong for FY2024 and FY2025, estimated at almost RM3.2 billion or 40 sen per share every year. After allocating some RM1.0 billion for capex for new data centre projects and Yes 5G expansion, it will still have some RM2.2 billion for potential cash dividends (estimated at 15 sen per share or RM1.2 billion) and share buyback (balance RM1.0 billion to buy some 5% or 400 million shares each in FY2024 and FY2025)

@sasukeuchiha, I don't have any maintenance schedule of PowerSeraya.

As you may know, PowerSeraya has various types of gas fired and oil fired plants. As one plant goes under scheduled maintenance, it can run up other plants to cover the generation though the cost of generation may be higher than the combined-cycle unit under maintenance. PowerSeraya can also enter into contracts-for-differences (CFD) with other gencos who have spare capacity to cover the generation.

It is the unscheduled or forced outages that may disrupt the generation for few hours or more, as it takes time to run up other units on standby or enter into a CfD with other gencos. As some of the gas units of PowerSeraya are getting old, so the forced outage rate is unavoidably becoming higher as each year passes. But in any event, such modern gas units do not cause forced outage rates beyond 5% typically a year.

5G business is a volume game, the profit estimation figures above may not look too impressive, but the profit increase will be exponential once it achieves the critical mass.

If Yes can get 3 million subscribers at RM60/mth, then it may achieve revenue of RM2.1 billion a year and RM600 million pretax profit a year.

If it could get 3 million subscribers at RM120/mth, then revenue would be RM4.3 billion a year and pretax profit would be RM1.7 billion a year, similar to what Telekom Malaysia is doing now with 3 million unifi subscribers.

As for green data centre business, the management has guided for PBT of RM100 million a year for the 1st phase of 48MW.

From my own simulation for loan tenor of 10 years, IRR of 15%, Pretax profit will range from RM65m in initial years rising to RM135 million when loans are fully repaid, so averaged RM100 million a year.

As the 1st phase will complete in early 2024, so we may only see full contribution from Q4 FY2024 onwards.

As for Yes 5G business, I see encouraging signs in last few months after Yes was the first to roll out 5G services in Klang Valley expanding to the rest of Malaysia.

In FY2023, YTLP telecommunications segment reported revenue of RM603m and pretax loss of RM268 million. Assuming gross margin of 50%, Yes will need additional revenue of RM268m x 2 = RM530 million a year to break even.

Hence, I think Yes will need a minimum 1.5 million 5G active subscribers to break even at average monthly fee of RM60:

Revenue = RM60 x 1.5m x 3 mths = RM270 million per quarter or RM1.1 billon a year
Gross profit = 50% = RM135 million per quarter or RM540 million a year (after DNB assess fee)
Estimated overhead of about RM120 million a quarter, so Yes would make a profit of RM15m a quarter or RM60m PBT a year when it achieves 1.5 million 5G active subscribers.

If it can get 2 million 5G active subscribers, then revenue will be RM360m a quarter, gross profit of RM180m/qtr and pretax profit of RM60 million a quarter or RM240 million a year.

Mr. OTB, I will try to give my best estimates for earnings contribution for the 3 sectors you asked above.

First, Wessex Waters reported a pretax loss last quarter Q4 FY2023 of RM57 million as it accrued a non-cash provision of RM54 million forindex-linked bonds.

As UK central bank just announced to pause interest rate hike in its last meeting a couple of days ago, I expect no more provision on index-linked bonds in the following quarters, and hence I expect Wessex just to break even for Q1, Q2 & Q3 FY2024.

Depending on how much water tariff hike it can secured for period commencing 1st April 2024, Wessex should start reporting profits from Q4 FY2024.

Assuming it can secure another 9% averaged hike in water tariffs, I expect Wessex to report PBT of RM88 million for Q4 FY2024.

Hong Leong has not given any value to YTLP sum-of-parts (SOP) valuation on the following:

1) Yes 5G business
2) Rawang WTE plant
3) Digital bank JV
4) Potential solar power farm in Malaysia to meet NETR demands
5) Potential RE export to Singapore

Hong Leong has valued PowerSeraya based on 3.5x Price/Book FY2022, but PowerSeraya book value has increased over SGD600 million in past 12 months to June 2023 (with net debts reduced by the same). Hence, PowerSeraya valuation should be increased by SGD600m x 3.5 = SGD2.1 billion or RM7.1 billion to RM25.3 billion.

http://www.hlgs.hongleong.com.my/published/article/SmprHzLsdd4ArFSiPqB53BVVOwuebLyeX1BBkEl5PN_u7GXBlESj1SjNRLqUcnohTTwtyZNEPqr8kmXxRZNZhnbPbBDnd4qNpWyHJTxMwPs1

try this link

@cgtan2020, I cannot find you in i3 messenger and send you the file. Perhaps you message me first then I send you the pdf file

Even if I take a 50% discount to regional data centre valuation, YTLP's 1st phase data centre will be worth RM2.8 billion or RM0.35 per share of YTLP. YTLP should be worth RM4.90 per share based on SOP valuation above.

Just imagine when YTLP fully develops the 500MW green data centre at Kulai, how much value it will add?

There are a several weak points in Hong Leong SOP valuation of YTLpower:

1) Wessex Waters' RAB has expanded to over 3.6 billion pounds, at 1.20x RAB, Wessex should be worth ((3.6 x 1.2) - 2.4) x 5.90 = RM11.3 billion, some RM1.2 billion higher than HL's value

2) PowerSeraya should deliver net profit of at least SGD760m a year for next 2-3 years. At PER of 10x (similar to that of Sembcorp and Keppel), PowerSeraya should be valued at SGD7.6 billion minimum. Minus net debt of SGD1.0bn, PowerSeraya should be worth SGD6.6bn or RM22.8 billion, some RM4.6bn higher than HL number

3) Attarat Power is expected to contribute earnings of RM400-500 million a year to YTLPower for next 30 years. Hence it should be valued at at least RM4.0billion to RM5.0 billion whether on PER or DCF method, doubling of what HL has valued

4) YTLP has an estimated net cash of almost RM2.0 billion at holding level, but HL has got it wrong at net debt of RM5.6 billion, a difference of RM7.6 billion

5) HL has not given any value to YTLP's green data centre business. As pointed out earlier, at NEXTDC valuation or Singtel's disposal of its regional data centre business to KKR at around USD35 million/MW, the 1st phase of 48MW data centre of YTLP should be valued at USD35m x 48 = USD1.68 billion or RM7.8 billion Enterprise Value. Minus out debt of RM1.1 billion for the 1st phase, the equity value should be worth RM6.7 billion.

With these 5 differences above, HL has under-estimated a total of RM22.3 billion or RM2.75 per share.

If added with this, the SOP valuation of YTLP should increase to RM3.23 + 2.75 = RM5.98 per share. Minus 10% holding discount, YTLP SOP value should be around RM5.38.

Hong Leong re-iterates tp of RM2.90 for YTLPower using sum-of-parts valuation.

It projects a net profit of RM2.0 billion for YTLP in FY2024. I think Hong Leong has under-estimated the following:
1) it has totally omitted earnings contribution from Attarat Power associate, by only recognising contribution from the O&M company and shareholders' loans. There should be potentially an additional RM200 million of profit to be recognised from the JV every year
2) Hong Leong may have under-estimated earnings contribution from PowerSeraya which alone should deliver at least RM2.07 billion net profit to YTLP in FY2024 & FY2025
3) Hong Leong has not included any earnings contribution from green data centre business

YTLP should be able to deliver net profit of around RM3.0 billion in FY2024, which will pose an upside of 50% to Hong Leong's projection. Once it manages to prove that in late Nov with the Q1 FY2024 result, I believe the analysts will upgrade their earnings projections for YTLP

Hong Leong research releases an update report on YTL Power today after a meeting with the management. Key updates are:
1) YTLP management guided for earnings sustainability for next 3 years
2) PowerSeraya earnings for FY2024 will be stronger, driven by tight market supply, high locked-in retails margin and secured long term cheap LNG supply
3) The 45% asscoiate Attarat Power in Jordan will contribute total RM300 million earnings in FY2024 from operations & maintenance and interests from shareholders' loans
4) YTLDC will roll out total 500MW of green data centre over next 10 years with total investments of RM15 billion. The 1st phase of 72MW is under construction (48MW secured with SEA Group) and will start contributing earnings in early 2024.
5) The development of 500MW LSS with SIPP at Kulai site will primarily to support the green data centres there. In addition to this, there will be opportunity to roll out more solar power for potential RE export to Singapore as well as to meet demand in Malaysia under NETR
6) The development of WTE plant with KDEB with 58MW power output expandable to 122.5MW at later stage will ensure longer term earnings growth for YTLP

https://www.thestar.com.my/business/business-news/2023/09/19/singtel-to-sell-20-stake-in-data-centre-business

Singtel is selling 20% of its data centre business to US KKR Group, valueing its data centre assets (total 155MW) at US$4.0 billion or S$5.5 billion. This is slightly lower than the market cap (AUD6.45b or USD4.1bn) of NEXTDC Ltd who owns 120MW of data centres.

Using this valuation matrix, YTLP's 1st phase of 48MW data centre should be worth some US$1.0 billion to US$1.3 billion Enterprise Value (EV).

I think the market has generally not yet factored in the potential of data centre business in YTLPower share price. Let's wait for Q3 or Q4FY2024 result to be out to see how much earnings the 1st phase data centre will contribute to YTLPower, then I believe the market will re-rate the share price upwards.

RHB has seriously under-valued the data centre business, by projecting a value of just 13 sen per share addition to YTLPower valuation for a 300MW data centre asset.


For comparison, a listed data centre player, NEXTDC Ltd in Australia with 120MW data centre has a market cap of AUD6.45 billion or almost RM20 billion!!


Posted by xiaochen > 27 minutes ago | Report Abuse

柔太阳能料加速发展杨忠礼电力目标价上调
https://www.sinchew.com.my/news/20230918/finance/4993949

Another married deal - 95 million shares changed hands at RM2.08 last minute today.

No wonder YTLP share price slided back in the afternoon, bcoz the deal was agreed at RM2.08. Hapseng share price also had some 30 million shares changed hands last minute today.

Looks like some funds are preparing ahead of next Monday when these 2 stocks will welcome more foreign funds buying.

Crude oil prices are at 2023 year high, matching towards US$100/bbl in near term.

High oil prices will have two positive effects on YTLPower:
1) it will promote a more favourable outcome from the Jordan arbitration case
2) PowerSeraya will have higher profit margin as it has locked in cheaper gas supply for 2 years

@cgtan2020, I wish them good luck!

AUD30 billion for a 1.7GW solar power export project from Darwin to Singapore?? That's over 17x the cost of installing solar power in Peninsular Malaysia.

This is my personal assessment from recent developments. You need to make your own assessment as to whether the recent developments will affect your holding on YTLPower.

RE players who export to Singapore will need to face the risks of electricity sales in terms of both the volume and pricing as Singapore market is competitive wholesale market. It means that even though these RE developers can generate solar power in Indonesia or Sarawak but they have no certainty of selling all of the solar power generated into Singapore if their bidded prices are too high or they do not get their offer strategy right. This is especially so when gas prices are low and baseload gas plants can break even at electricity prices as low as S$50/MWh which will not be sufficient for RE importers to make any profit. Under such circumstances, RE producers would find themselves fully loaded with solar energy stored in battery storage but not able to sell it into Singapore market due to pricing or hedging strategy (or lack of).

On the contrary, solar power producers in Malaysia will likely be awarded a long term contract similar to those awarded under LSS tenders, which will allow them to make decent returns with certainty of volume offtake and pricing.

This is evident from the fact that RE players in Semenanjung Malaysia (like Tenaga/ Malakoff/YTLP) have not been too keen in pursuing RE export to Singapore. We have only seen news on RE players trying to export from Indonesia and Sarawak.

It could be also due to fierce competition there in Singapore RE import, and also partly due to our government's aggressive RE plan for next few years. Both Malaysia and Singapore governments are essentially fighting for the same pool of money from private RE players.

Now things are looking more positive in Malaysia after the government rolled out the National Energy Transformation Roadmap (NETR). The government is pushing hard on new RE projects in Malaysia with a targeted total solar power installed capacity of 7GW by 2030 and 56GW by 2050, from currently only 3GW.

That means that are potentially 4GW or 4,000MW of solar projects up for grab by 2030 and another 49,000MW potential in next 2 decades. These are astonishing targets which offer lots of opportunity for every RE player here including Tenaga and YTLPower. I expect YTLP to grab some 300-500MW of solar power by 2030.

last time when there was limited RE projects as the government limited new solar capacity to 500MW to 800MW each year in its LSS tenders, RE players were very aggressive in bidding for the solar projects under LSS tenders and hence the winning price was too low until some of the RE winners could not achieve financial close as solar panel prices went up.

Now the demand for solar is so great - 4000MW by 2030 or 600-700MW solar projects up for grabs every year until 2030, then almost 2,000MW solar projects to be rolled out every year from 2031 to 2050. The pie is big enough for every RE player, big or small. Hence the price will not be as competitive as in previous LSS tenders and it will allow each RE player to earn a decent return so that each project can achieve financial close and go ahead.

I was positive of YTLP getting a slice of the RE export to Singapore when EMA announced the plan of importing 4GW by 2035, but as things evolve I am now less keen to see YTLP exporting RE to Singapore.

I am more of hoping PowerSeraya to defend its market share by running the efficient gas plants as baseload units (as RE import is sometimes irratic depending on weather and undersea conditions), capitalising on cheap gas supply to be secured now and then, and ramping up its retails electricity arm to create a strong customer base so that it may forge some sort of cooperations with the RE producers who do not have retails presence in Singapore. This way, PowerSeraya will be able to survive by running decent load factors as baseload plants (as existing plants are largely depreciated) and capturing some of the upside from selling RE import to its retails customers.

@ltlim74, the competition will only get fierce for RE import to Singapore as external parties generally view this as a good lucrative contract to enter the electricity market there. But most of these external parties are not well versed with how the competitive market works there. It is the same situation as in 2012-2013 when Singapore government introduced LNG into the market and various parties scrambled to subscribe to LNG supply. Hyflux and Pacific Light were ones of them, and all suffered losses in subsequent years. The heavily debted companies like Hyflux went bust and assets taken over by PowerSeraya.

It may look good for external companies to get a slice of the RE import purely looking at the electricity price difference in Singapore and in Malaysia/Indonesia. Often these companies overlook the risks associated with the export of RE and uncertainties with the selling price and volume, as well as the risk with RE production which depends very much on weather conditions. I would think that the first movers who bring in RE into Singapore may earn some money in the first 1-2 years then they may start realising that the margin will not be as great as they thought initially as the market is flooded with more RE import. We may see more RE players dropping out as they simply cannot get their RE project financially closed as bankers see the weakening electricity prices. Eventually if EMA gets aggressive in promoting RE import, then eventually what they might get would be a temporary over-supply situation followed by failed projects and lack of interests in investments for years to come.

I think we do not need to be too worried about the RE import into Singapore from Indonesia. In fact, this was well expected as Singapore already announced its target of importing 4 GW of RE by 2035. The closest countries to Singapore are Malaysia and Indonesia, so it is not a big surprise for Indonesia to get the lion share of the pie as Malaysia still banned RE export until recently.

Furthermore, this is only conditional approval, and by usual practice, EMA typically grants approval for more projects at initial stage in anticipation of some projects failing to achieve financial close and go ahead. So it would be very good if Singapore eventually gets 1,500MW from Indonesia. The 1,000MW RE import from Cambodia by Keppel via 1000km undersea power cables is even more far stretched, with costs unknown.

I suspect these projects from Indonesia will eventually need to go through competitive RFP process as usual, and solar power projects from Malaysia will still have cost advantage over those from Indonesia. In any event, I still expect minimum of 1,000MW to 1,500MW solar power export from Malaysia to Singapore.

Furthermore, Malaysia government is pushing for ambitious RE plan over next 15-20 years, and there is potential of over 5GW solar power projects up for grabs in Malaysia by 2030. YTLP is in a good position to grab some of it.

Based on info from EMA press media release, the RE import from Indonesia shall commence from end 2027, so the electricity market in Singapore will continue to be tight for next 2 years, i.e. PowerSeraya will continue reporting good earnings for FY2024 and FY2025. Depending on the peak demand growth in Singapore, PowerSeraya may continue posting good earnings for FY2026 and FY2027 if demand growth is as high as EMA projected.

All in, I still expect YTLP to report EPS of 40 sen (PAT of RM3.2b) for FY2024. At PER of 10x, YTLP should trade up to RM4.00. Even if I knock off 10% profit to allow for continued weak earnings from Wessex into Q3 FY2024 and lack of extraordinary profits from PowerSeraya/Jordan, YTLP should trade up to RM3.60 in 2024.

Posted by cgtan2020 > 1 day ago | Report Abuse

https://www.ema.gov.sg/news-events/news/media-releases/ema-grants-conditional-approvals-for-2gw-electricity-imports-from-indonesia

Pacific Medco Solar Pte Ltd, formed by PacificLight Renewables Pte Ltd, Medco Power Global Pte Ltd and Gallant Venture Ltd 0.6GW
Adaro Solar International Pte Ltd., formed by PT Adaro Clean Energy Indonesia 0.4GW
EDP Renewables APAC 0.4GW
Vanda RE Pte Ltd, formed by Gurin Energy Pte Ltd and Gentari International Renewables Pte Ltd 0.3GW
Keppel Energy Pte Ltd 0.3GW

@cgtan2020, I don't quite agree that utilities stocks rarely trade above 10x PER. Just look at below stocks:

Tenaga - PER 11.5x DY 4.8%
Petronas Gas -PER 18.9x DY 4.2%
Ranhill Utilities - PER 15.9x DY 4.1%
Press Metal - PER 26.6x DY 1.5%
Malakoff - loss making DY 3.4%
MAHB - PER 18.9x DY 2.9%
Dialog - PER 23.4x DY 1.6%

@cgtan2020, this TPC data just shows that the TPC cap price has increased to S$584/MWh in 16-30 Sept from S$500/MWh in 1-15 July, as the gas prices have gone up so the spot LRMC price has gone up in tandem.

It does not mean much to Gencos' margin. But as far as I know, the supply is still tight and spot USEP still hit TPC cap price on several occasions in Sept.

YTL just injected a 5-star hotel into YTL Hosp REIT for RM138 million, and will realise a disposal gain of over RM80 million and get cash proceeds of RM138 million.

This is part of its monetisation program, expect more to come. Next could be a hotel/resort in Niseko Japan. SO far only Hilton Niseko has been injected into the REIT, there are 4 other hotels/resorts there already achieved steady occupancy rates and income.

YTL launched its latest collection, Mandala Club Niseko last month, on track to add one or 2 new hotel/resort at Niseko every year.

@hoplanner, YTLPower-C33 is a call warrant issued by CIMB with conversion price at RM1.65 and conversion ration of 1.5.

Upon expiry, this call warrant will be cash settled by CIMB. If YTLPower is at RM2.55 then YTLPower-C33 will be settled at
(2.55 - 1.65)/1.5 = RM0.60 per warrant.

@jeffchan1901, conventional warrants always rise in tandem with the mother shares, but there are other types of alternative warrants which may do the oppposite.

Conventional warrants are issued by the company itself to raise equity money when warrant holders exercise the warrant to convert into mother shares, often 1 warrant to 1 mother share. The tenor of these conventional warrants are long at 5 years typically.

Call warrants are issued by broker houses like CIMB or Maybank or Macquarie Bank, and not issued by the company itself. eg. YTLPower-C33 is a call warrant issued by CIMB at conversion ratio of 1.5 call warrant to 1 mother share. But these call warrants are not exercisable nor convertible to mother shares, but are cash settled at expiry which typically falls within 6-9 months of issuance. Call warrant prices rise in tandem with the mother share according to the conversion ratio, eg. YTLP-C33 will rise 2 sen if the mother share rises 3 sen.

Put warrants are opposite of call warrants, in that their prices fall when the mother shares go up.

Perhaps when YTLP mother share rises above RM4.00 next year and dividend yield falls below 3% then only the issuance of a 3%-coupon bond would appeal to investors then.

furthermore, who would subscribe for the 3% coupon bonds while they can buy the mother shares to enjoy over 7% dividend yield and almost 100% capital gain in next 2 years??

You buy redeemable bonds only to get a fixed coupon of 3% without the chance to ride on the common stock potential capital gain, as the bonds will be redeemed at cost upon expiry.

taking the examples above, a 1-for-4 free warrant issuance will give away 2 billion free warrants to existing YTLP shareholders, which will be worth RM2.00 each warrant when the mother share rises to RM4.00 later in 2024-2025. So each existing YTLP shareholder will get 250 shares of free warrant which will be worth RM0.50 for each YTLP mother share held.

And these new warrants will raise equity money of RM2.00 x 2bn = RM4 billion to YTLP in 5 years, which will come in handy to replenish its cash holdings.

@cgtan2020, the company needs to pay back the money to bond holders of any redeemable bonds issued, it is not free money. The company will need to pay a fixed coupon to bond holders every year, before redeeming all of them at principal sum, i.e. YTLP will need to get RM2 billion cash ready to redeem the bonds in 5 years time if the company issues RM2bn worth of bonds now, on top of paying RM60 million of coupons every year to bondholders.

I don't see the need of doing such at the moment, as YTLP is not short of cash.

But a free warrant issuance will be highly positive for the company and the share price.

@hoplanner, I am not sure what you meant. YTLP has secured debt funding of over RM1.1bn for the 1st phase green data centre at Kulai, the balance was funded by equity money.

SEA group has committed to take up 32MW minimum of the first phase data centre, which means they will pay concession fees to YTLP for this portion of the project. Don't get mixed up with the debt/equity funding of the project.

@cgtan2020, the capex requirements for the WTE plant and the secured 200MW green data centre parks (after the 1st phase 48MW fully funded already) at Kulai will be about RM900m and RM1.2 billion respectively over next 3 years.

YTLP has some RM1.0-2.0 billion net cash at holding level based on my rough estimates, and will have operating cashflows of over RM2.5 billion a year for next 2-3 years. So I would expect YTLP to have no issue of funding the equity portion of the capex requirements for the WTE and green data centre park jobs.

I am not too sure of any benefit of issuing redeemable bonds at the moment but I do see the advantage of giving out free warrants which will serve several purposes:
1) to raise funds over next 5 years, eg. issuance of 400 million warrants (1 warrant for every 20 ordinary shares) at exercise price of RM2.00 per share may raise equity money of RM800 million
2) to reward existing YTLP shareholders by giving out free warrants which will be worth RM1.00 per warrant when mother share reaches RM3.00

@Abcdefg123456789, it is hard to predict how YTLP share price will move for short term, in fact it is impossible to predict short term share price movements for any stock.

As stated before and agreed with Mr. OTB's forecast, I think YTLP should be able to touch RM4.00 in 2024 based on 10x PER.

definitely no more cheap power as Brent crude oil price shot past USD90 per bbl.

It will be good for PowerSeraya profit margin as it has secured relatively cheap gas for next 2 years and also good for Jordan power arbitration case.

Bonia just won an arbitration case against an individual for their JV in Vietnam. Bonia will be getting RM21.47 million of compensation from this case.

Coupled with the proceeds of RM17 million from disposal of 30% stake in Sembonia, Bonia will have total RM38 million of extra cash proceeds in FY2024, which pave the way for a bumpy special dividend of at least 10 sen.

I see this as a healthy correction after a good rally from RM1.38 on 1st August to a high of RM2.19 yesterday.

Any sustainable rally needs time for consolidation before the next uptrend. YTLP may consolidate for 1-2 months before the next quarterly result which may be the next catalyst for a new uptrend, or may break up RM2.19 by 18th September when it is included in FTSE Asia Pacific index and foreign funds buy in.

It may also dip to RM1.80 if coupled with a "bad" news when certain fractions want to press the share price down to buy lower. Remember the incident on 20th June when the news of EMA introducing TPC broke out, YTLP share price dipped from RM1.30 to RM1.15 intraday but quickly rebounded leaving a tail in the chart. I had suggested that as a good buying opportunity but not many had listened. I was glad to have added a lot at below RM1.20 then.

In any event, I see RM1.88 as a strong support, which incidentally was the level foreign funds pushed up to on 21st August when the news of YTLP inclusion into FTSE Asia Pacific index came out.

@batmanisbest, please see calculations below which I did in last May on YTL Power's net cash position. There has not been much difference in YTLP balance sheet since then except for the increase in gross cash holdings after the disposal of Electranet.

Cash holdings and Debts

YTL Power disposed off its 35% stakes in Electranet Australia for RM3.05 billion in Feb 2022. This effectively turns YTL Power into a nett cash company at the holding level.

Investors may be deterred by purely looking at the massive debts at YTL Power’s balance sheet. These debts are high as YTL Power consolidates debts of various subsidiaries which are mostly ring fenced at the subsidiary level. For instance, Jordan Attarat Power may have total borrowings of USD1,500 million and YTLPI may have consolidated RM2.7 billion of debts in its balance sheet. But this debt is fully ring fenced at the project company level Attarat Power, meaning that any default at Attarat Power will not cause any cross default nor have any repercussion to YTL Power level. These debts will be serviced solely by Attarat Power with its own operating cash flows and YTL Power will not need to pump in any money to help servicing the borrowings there.

As of 31 Dec 2021, YTL Power has total debts of RM30.8 billion on its balance sheet and gross cash holdings of RM10.3 billion, hence nett debt of RM20.5 billion. An estimated RM12.8 billion of nett debts sit in Wessex Waters company level, RM6.0 billion in PowerSeraya, RM2.7 billion in Attarat Power. PowerSeraya may have cash of SGD200 million and Attarat Power USD300m. Hence, after we remove nett debts ring fenced at subsidiary level, YTLPI actually may have nett debts of RM20.5b – 12.8 – (6.0 – 0.6) – (2.7 – 1.2) = RM0.8 billion. This is lower than the estimated nett debt of RM1.1 billion by Maybank analyst and RM7.4 billion by CIMB analyst.

After the disposal of Electranet for RM3.05 billion, YTL Power will turn to a nett cash position at holding level with estimated nett cash of RM2.2 billion or 27 sen per share.


dragon328

1,337 posts

Posted by dragon328 > 5 days ago | Report Abuse

and some further differences in debt amounts due to exchange rate fluctuations:

Wessex debt of 2.3b pounds has become RM13.8 billion at 1 pound = RM6.00 now compared to RM5.50 last year
Jordan debt of US$1.5b has become RM3.0 billion at USD1.00 = RM4.55 now compared to RM4.10 last year
PowerSeraya debt of SGD2.0 billion has become RM6.8 billion at SGD1.00 = RM3.40 now compared to RM3.05 last year

So total debts at these 3 assets level have gone up by RM2.1 billion in ringgit terms, but YTLP has since seen few hundred million of ringgit of operating cashflows (say RM700m) since Dec 2021, so its net cash position has become

RM2.2bn (last May) - RM2.1bn + RM700m = RM800 million very roughly