YTL Power is the cheapest utility stock in Bursa with FY24 PER of just 8.6x at opening price of RM3.61 just now. PER will fall to just 8.0x FY2025 earnings.

Other utility stocks are well over 20x PER. Value shall prevail eventually.

Be careful with what you say. MACC director when contracted confirmed the matter, which is the investigation into the 1Bestarinet project payment claims, not the raid into YTL Comms office. I would fall back to the company official statement, and not trust any unknown "source" to Bernama.

Wow so good to have the chance to buy at 3.61, and I guess an estimated 1.5 million shares of shorts were closed out at opening.

MACC has recently requested information from YTL Comms in respect of the 1Bestarinet Project. There was no raid in the office, YTL Comms is providing full cooperation to MACC on this matter.

This is an old project which was awarded to YTL Comms in 2011 by the Ministry of Education in an open tender. YTL Comms was selected as being the most technically compliant and most cost-effective bid.

There was nothing wrong on YTL part and YTL has seen such allegation before.

I think short sellers were using this news to benefit by betting lots of shorts on YTL Power in past 2 weeks, but more than 5 million shares of shorts were closed out yesterday. The remaining shorts, estimated to be less than 8 million shares should be using this headline news to close out tomorrow.

MACC has recently requested information from YTL Comms in respect of the 1Bestarinet Project. It was not an office raid as reported by certain media.

YTL Comms is providing full cooperation to MACC on this matter.

This is an old project which YTL Comms was selected for being the most technically compliant and most cost-efficient bid in the open tender. The project has been certified by the Ministry of Education as being successfully completed at the end of the contract period on 30 June 2019.

@cktay, you can pm me using i3 messenger. Let me try to find you there

Correction, the net short positions on YTL and YTLP may not have come to zero, but are less than 0.1% of their respective paid-up share base, i.e. net short positions on YTL have reduced to below 11 million shares and NSP on YTLP has reduced to below 8.2 million shares as of yesterday.

Bursa latest data shows that the net short positions on YTL and YTL Power have both reduced to zero yesterday, meaning that short sellers closed all their short positions on these two counters with buying of over 13 million shares of YTL Power yesterday and over 12 million shares of YTL on 28 August.

That reinforces my earlier projection that short positions on YTL and YTLP would be closed out after the Q4 FY24 results.

Foreign funds are ahead of us in their actions in many cases, just like they bought in big on YTL and YTL Power in Jan 2024, right after YTL Power announced the tie-up with Nvidia in Dec 2023. They started selling down on YTL and YTL Power in early May 24 after the share price of both counters had jumped up by 100% since early Jan 2024. That might be just profit taking after gaining 100% in 4 months.

Foreign funds not only sold down on YTL/YTLP, they also sold down on property counters like SPSetia and Eco World in July-August after buying big in early Jan 24. They switched from some property counters to big cap construction stocks like Gamuda and IJM, but have since also sold down these construction stocks.

They found new targets in banking stocks in July then Tenaga in August, all blue chips liquid enough for foreign funds to park their money after selling off YTL/YTLP, property and construction counters.

Right now, foreign funds are still buying big on Tenaga after it released a good set of results end of August. They have switched bank stocks from CIMB to Public Bank and Maybank. I expect their buying in Tenaga and bank stocks to taper off in coming weeks, as they sense not much upside to be derived as local funds and local retailers are selling big time to them. for instance, local funds net sold a total of RM172 million worth of Tenaga and local retailers net sold RM14m of Tenaga yesterday while foreign funds net bought RM184m.

It looks like typical rotational plays by foreign funds when they come into Bursa. Soon I expect foreign funds to buy back on YTL and YTL Power after paring down their holdings to the minimum, as both companies continue to announce strong profits in next few quarters.

And I suspect retails counters may be the next targets of foreign funds, as 99 Speed Mart will be listed next Monday and consumer spending is expected to rise after massive amounts of funds were withdrawn to the Third Account of EPF and PMX announced big pay rise for civil servants.

@SCM2023, I cannot speak for foreign funds and don't claim to understand fully their recent moves. But typically foreign funds are in and out within 4-6 months, they bought in big on YTL in Jan-Mar 2024 with total purchase of over RM850 million. Foreign funds had been selling YTL shares since May 24 and have almost sold off their entire holdings in YTL within 4 months.

Maybank latest fund flows report this morning shows that foreign funds sold a total of RM190m worth of YTL shares in the month of August, effectively bringing down their holdings in YTL to zero. So we will not see much selling on YTL from foreign funds going forward.

Foreign funds sold a net RM231m worth of YTL Power shares in the month of August, bringing their net holdings in YTLP to about RM60 million only as of 30 August 2024. But they bought back some RM16m of YTLP shares last Thursday and RM20m last Friday, then net sold RM9m on Monday.

I guess foreign funds will maintain holding about 30 million shares in YTL Power in near term, and hence selling by foreign funds on YTL Power will ease off substantially going forward.

@cktay, Maybank research publishes a monthly report on fund flows which summarises the top 20 buy / sell counters of foreign funds for the prior month. HLIB sends around the daily fund flows data that summarises the top 10 buy / sell counters by foreign funds, local institutional funds and local retailers. I believe both research houses get the data from Bursa, just they choose to publish it differently.

I have been tracking the funds movements in YTL, YTL Power and IOIPG since early 2024. I have all the monthly reports from Maybank. If you are interested, can pm me.

After the expiry of a call warrant last Friday, IOIPG can enjoy steady rise now.

With the Shenton House proposal rejected, IOIPG should be gradually going back to RM2.50 level.

Other positive developments for YTL are:

1) Strengthening ringgit will be a massive re-rating factor for MCement (in which YTL owns 73% stakes), as the bulk of its costs (particularly coal prices) is denominated in US dollars. With its revenue mostly in ringgit, weakening US dollars will reduce its operating costs tremendously and increase its profits. A simple calculation shows that a 10% strengthening in ringgit against US dollars will reduce MCement operating costs by about RM200 million a year (estimated based on total costs of goods sold of RM2.5b a year, 80% denominated in US dollars).

2) Market expectation is for MRT3 project to be revived soon and be included into 2025 budget of the government. Recall that YTL was the lowest bidder for one of the packages at slightly below RM11 billion. YTL will be in a strong position to win a portion of MRT3 project when revived.

Foreign funds turned sellers of YTL Power yesterday with a net sale of RM9m worth of shares, as cktay highlighted above.

Foreign funds' holdings in YTL Power dropped to a low of about 30 million shares last week, a big drop from the peak holdings of close to 400 million shares in Jan-Feb 2024. I suppose this 30m shares is sort of the minimum hold by some of the foreign funds who opt for longer term holds or who use it as hedge for their call warrant issuance.

This also shows that local institutional funds have collected over 300 million shares of YTL Power in past 2-3 months, and the average price is likely to be around RM4.00. Local institutional funds like EPF are likely to be long term investors, unlike foreign funds typically in and out within 4-6 months.

With early signs of foreign funds gaining re-entry into YTL Power, and local institutional funds likely not selling at current prices which are about their average entry price, YTL Power share price may see good upsides when there is some good news that attracts more foreign funds to come in.

https://theedgemalaysia.com/node/724958

Macquarie is positive on YTL Power.

Remember - short sellers cannot short forever, at some point in time, they have to close out the short positions. But we as value investors can hold on for as long as we want, so we shall win eventually if you have the holding power.

Volume for YTL Power has already exceeded 30 million shares as of 4.20pm, and I think the call warrant issuers may have sold whatever they want to sell by now, probably left a couple of million shares more for which foreign funds as well as local funds are preparing to scoop up.

Short term share price fluctuations do not bother me, and only affect short term traders and short sellers who are betting at the wrong direction.

The tide is turning as foreign funds are starting to buy back YTL Power, as shown by the latest data. Foreign funds net bought RM20m worth of YTLP shares on Wednesday and another RM16m yesterday. Maybank data already shows that foreign funds' holding in YTLP has dropped to about 30-40 million shares only as of 31 July 2024. These are probably long term holdings for those foreign funds who will not sell at current prices.

Local funds have been buying big in YTL Power in past few weeks, given the fact that PMX has been calling EPF and the GLCs to allocate more funds to investing locally. With the appreciating ringgit, foreign funds will continue coming in.

Initial numbers from Singapore power sector are coming in good for the month of July, and Wessex should be reporting another quarter of decent profits in Q1 FY2025 having turned around in Q4 FY24. Yes 5G division will report profits for next 2 years as project revenue continues kicking in from the Sabah project that lasts for 3 years. Colocation data centre revenue has been flowing in since April-May 2024 and the 1st phase AI data centre is on track for completion in 1H 2025 (Jense Huang repeatedly said lots and lots of Nvidia GPUs would be shipping out in 2H 2024). LSS5 is on track for awards early next year, for which YTLP has submitted a competitive bid. UK Brabazon property project is on track for delivery of first landed homes to the buyers in 2H 2024. There are various initiatives undertaken by YTL Power team, which will be announced when the time is ripe.

So having bet wrongly on the Q4 FY2024 result, short sellers are betting on the last hope of call warrants issuers dumping all their holdings in YTL Power today itself. I wish them good luck.

I have highlighted the negative developments around YTL Power, not only the positives as some claimed.

In my earnings projection, I have lowered PowerSeraya earnings contribution to even lower than the last quarterly contribution, and in line with most of the sell side analysts'. For instance, I project PowerSeraya net profit to drop from SGD876m in FY2024 actual by 23% to SGD680m in FY2025 and further down to SGD600m in FY2026 as the new CCGT from Keppel and Sembcorp come in.

I have also highlighted the weak second draft determination of Ofwat for Wessex, and have assumed this set of weak determination parameters in my earnings projection for Wessex.

But unfortunately these are never enough for naysayers and short sellers. And it is not my problem.

YTL Power as an international utility company which has long term businesses in various countries ranging from the UK, Singapore, Jordan to Indonesia, typically does not speculate on currency fluctuations. Most of its businesses are almost fully hedged against currency fluctuation, so its earnings are not affected by currency fluctuations.

Of course when ringgit appreciates against Sing dollars, the earnings of PowerSeraya will be lower in ringgit terms, it is common sense.

In my earnings projection, I have taken into account of the strengthening ringgit, but will not speculate on how much ringgit will go further. That's for traders to speculate upon, not for me.

@SCM2023, I got the data from HLIB who distributes a summary of fund flows every morning to its clients.

FYI, foreign funds bought another RM16m worth of YTL Power shares yesterday. And Net short positions on YTLP reduced to 14.3m shares yesterday.

With the call warrants expiring today, expect any final round of selling from call warrant issuers to end soon and short sellers will scramble to cover their short positions later today or early next week.

I am not so sure about that connection to data centre business.

I see most analysts are concerned with the failed turn around of IOIPG hotel business in Q4 and inventory write-down in PRC property business. Some are concerned with the commencement of IOICB in Sept 2024 after which IOIPG will start expensing off the interest costs at IOICB in Q1 FY2025 (as opposed to earlier expectation of Q2 FY2025).

Nvidia share price suffered some 7% drop in after-hour trading though the company announced market-beating Q2 result. I guess the good results can never satisfy the most bullish investors, and naysayers will continue playing down on the strong earnings and strong guidance for Q3.

Over here, YTL Power suffers the same fate with its share price down to pre-result level, as sell side analysts keep saying PowerSeraya has passed its peak earnings and there will be delays in AI data centre roll out.

Not to forget that there are two call warrants on YTL Power expiring on 30 August. The potential share overhang may be over 30 million shares as market says that the call warrant issuers have no intention to issue any new call warrant, hence will sell off their hedged mother shares.

I think after the expiry of the call warrants on 30 August and closure of more short positions on YTLP by end of the month, hopefully the share price will see steady rise.

Despite all this noise, foreign funds bought back RM20 million worth of YTL Power shares yesterday. I think there will always be funds that see deep values in YTLP.

I think the selldown on YTL Power in past few days is mainly due to selling of short term traders after the Q4 result announcement and speculative short selling activities. There is nothing change in the fundamentals of the company with continued strong earnings expected from PowerSeraya and explosive earnings contribution from AI data centres next year.

Despite the record profits achieved by YTL Power in FY2024, naysayers and short sellers can always find excuses to play down the strong earnings. They keep on saying that PowerSeraya earnings will tank in the future but have again proven wrong in this Q4 FY2024. I expect them to be proven wrong again in Q1 FY2025.

Despite the clarification from YTLP management in the post-result analysts' call, some sell side analysts still keep on saying that the AI data centre progress will be delayed due to delays in Nvidia Blackwell GPUs. It is up to what they want to say, but they are wrong.

It is like Nvidia. Its CEO Jensen Huang has repeatedly reassured that the Blackwell GPU production is well on tract for delivery in 2H 2024, but still some choose to ignore the fact.

Amidst all this noise, foreign funds bought back RM20 million worth of YTL Power shares yesterday. I think there are always funds that find deep values in YTL and YTL Power.

You can see Nvidia share price also suffered 7% drop in after-hour trading after it announced market-beating Q2 results. Naysayers and sell side analysts always can find excuses to play down on the record profit announced by YTL, YTL Power and Nvidia.

But I won't be distracted from such noise and will just hold onto my YTL and YTL Power shares to enjoy the earnings growth in next few years.

YTL fundamentals are strong with continued earnings growth in the next few years. The share price drop in past few days is mainly due to selling by short term traders after the good Q4 result announcement and short sellers targeting YTL and YTL Power shares after these 2 stocks have jumped up multiple times in past one year.

Making things worse is the expiry of two call warrants on YTL on 30 August, some funds estimate the potential share overhang from these 2 expiring call warrants may be over 30 million shares. Hopefully after the expiry of these call warrants and closure of more short positions by end of the month, we can see steady rise in YTL share price.

https://klse.i3investor.com/web/blog/detail/dragon328/2024-08-29-story-h-153177383-IOIPG_The_Dawn_of_Explosive_Earnings_Growth

My analysis of IOIPG Q4 result as above for your leisure read. It is good for long term investment.

@Aero1, I do not study Nvidia results as I have not invested in the stock. But looking at the headline numbers, I think Nvidia has delivered a Q2 result that beat market expectations with quarterly revenue of US$30.04 billion, surpassing its US$28b estimate in May. Net income rose to $16.95 billion from $6.19b a year ago, more than double year on year.

For the Q3 ahead, Nvidia expects revenue of $32.5 billion +/-2% with gross margin of about 75%. This guidance is also more than market expectation.

However, the share price dropped some 7% after hours. It did suffer the same fate as YTL Power in some way, as YTLP also announced market-beating Q4 result but share price has since dropped back to pre-result level.

I think the Nvidia result is good but did not give any positive surprise to impress the most bullish investors who have asked for the sky.

Same thing over here for YTL Power. Though the company has achieved financial results that beat market expectation, including continued strong earnings from PowerSeraya, but the sell side analysts and short sellers always have excuses to play down the record profit in FY2024.

Mr. OTB, It is true that foreign funds have been selling YTL Power and most recently property counters, and buying lots of banking stocks.

They have sold a lot of technology stocks, I think, mainly based on over-valuation and reducing profits. Inari reported lower earnings yesterday.

As for YTL Power, I do not want to speculate too much at this moment on why there was so much selling on the stock. One of the reasons was rampant short selling activities on YTL Power days before the Q4 result announcement. Shorties were betting on a disastrous Q4 result from YTL Power but to the contrary, YTLP reported a super strong Q4. Some short positions were closed shortly after the Q4 result announcement, about 8.5 million shares last week, and again about 6.0 million shares yesterday.

Foreign funds still hold little bit of YTLP and their selling on YTLP has eased off lately. I am waiting to see when most of the shorts are closed and foreign funds holding in YTLP turns towards zero, then I can only have some clues on the reason behind the selling.

I do not think the selling has anything to do with fundamentals.

Against Q3 FY2024, Q4 core earnings would have been higher as well. Recall that in Q3 Fy2024, the earnings were boosted by a land sale amounting to RM211 million.

@stockpicker888, as explained above, there was some hotel asset write-off in the hospitality segment in Q4 FY2024, which I suspect was related to old assets at the recently acquired W Hotel KL. I would treat it as one-off and estimate it to be around RM80m.
So I would put the core PBT of Q4 FY2024 to be around RM170m which would be some 60% higher than last year Q4.

@Agjl, excluding the revaluation gains and impairments, the underlying PBT is RM87.3 million as stated in the report. But in the hotel segment, there was additionally some higher depreciation and write-off of hotel assets totalling RM96.7m, if I exclude the write-off of hotel assets, I estimate the underlying PBT would have been around RM170 million.

The decline of Shenton House proposal is a good deed by IOIPG management and board of directors. The explanation given is just right as it would increase IOIPG gearing further to 0.89x.

Recall that IOIPG share price suffered heavy selling in the few days before the Shenton House proposal was announced, the share price dropped from RM2.50 level to RM2.00 level. Now that the proposal is rejected, the share price should at least climb back to RM2.50 level.

@myloh123, I have detailed the benefits and impact on IOIPG should it set up a REIT to house its assets in 3 categories:
1) first a commercial REIT in Singapore to house its prime office towers IOI Central Boulevard, then at later stage inject Shenton House into this REIT - total valuation over SGD5.0 billion for IOICB and SGD2.0 billion for Shenton House

2) a commercial REIT in Malaysia to house all its office towers and shopping malls, with IOI City Mall being the biggest asset, together with IOI Mall Puchong and the recently acquired Tropicana Gardens Mall - total valuation may be over RM6.0 billion

3) a hospitality REIT in Malaysia to house all its hotels - total valuation over RM2.0 billion

Please refer to my earlier article on IOIPG for more details

2.60

wow pang72 you are so chun chun

Mr. OTB, be my guest.

I do reckon that Bursa is entering a bull market now.

@Aero1, the estimation on AI data centre earnings is tough as limited info is available now. I was using my best guess as to the average rental rate of GPU per hour, overhead costs, and depreciation assumptions.

As you can see from my previous article, the EBITDA will drop to low 70+% without solar power.

Also if the depreciation period assumed for the GPU chips is shortened to 3 years, the pretax profit will reduce by 30%-40% straightaway and EBITDA margin down to 40%-50%.

So it is really up to what assumptions you make in the average rental rate per GPU per hour, overhead costs and depreciation / tax assumptions.

As for ROI, I calculated that for a 48MW AI data centre, the median capex was RM5.2b and net profit estimated to be RM768m a year, so ROI may be15%.

@Aero1, I suggest you go through my previous article below in which I detailed calculations on potential AI data centre earnings.

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

Finally PBA delivers.

@hng33, you are good to have given the heads-up

I have not put in any profit at all from the additional water supply to new data centres, so you are free to add in any extra profit Ranhill may get from such supply.

I will just remind that Ranhill will need to incur some capex to expand its water treatment capacity and expand water piping network before it can supply such a big increased water supply, so depreciation charges and interest expense will increase which will lower your additional profit projected above. Please take note. Thank you

I am not sure of how much increase in water supply volume Ranhill will see from the new data centres in Johor. Just doing a rough estimate

Ranhill SAJ supplied a total of 671 million m3 of water in 2022, and Ranhill achieved revenue of RM1,173 million for the water / environment segment in FY2022. This implies an average water supply tariff of RM1,173/671 = RM1.75 per m3.

Based on your figure of 115 million m3/day of water usage increase by 2035, that would be equal to 17% increase from existing water supply volume in next 10 years, which seems reasonable to me. Ranhill SAJ should be able to meet such water demand progressively.

However, I am not sure of where you got the figure of RM2.50/m3 of pretax profit margin from.

Mr. OTB, my earnings projection for Ranhill was very rough in this article as I have not really studied the company in details.

My earnings projection of RM50m in FY2025 rising to RM100m in FY2026 was purely based on the assumption that YTLP would be able to introduce cost cutting measures and synergies into Ranhill after take-over, and nothing yet from increase in water supply for the booming data centres.

If you look into Ranhill latest June 2024 quarterly result, you see a segment called Investment Holding and Management that lost RM78.414 million in half year 1H 2024. That could be the low hanging fruits that YTLP could plug any leakage in Ranhill. I assumed YTLP to be able to cut 1/3 of such losses in FY2025 and 2/3 in FY2026.

For the increased profit in FY2028 and FY2031, I assumed that would arise after a water tariff hike every 3 years after the last one in Feb 2024.

@raymondroy, based on my latest assessment, YTL Power will not see a dip in earnings in FY2025 from FY2024, as suggested by certain analysts. I think they still overplay on the issue of PowerSeraya declining earnings, and they tend to play down on the data centre earnings prospects.

These 2 areas present higher uncertainties and so have become the easy targets of the sell side analysts.

@sii581014, the shareholders' loan from YTLP to Jordan Power project company has increased over the years of construction as the interest income was accrued and added to the shareholders' loan balance. Post commercial operations, I think the Jordan Power project company has been paying the interests to the shareholders' loan from YTLP at 15% p.a.

I am not sure when exactly the shareholders' loan will get repaid, but typically after the project loans are fully repaid in 10-15 years after commercial operations.

@eugenewong794, yes going forward we should monitor the news flows from the AI data centre development and Ofwat final determination in Dec 24.

As for UK Brabazon property segment, the cooling inflation and lowering interest rates are good signs, and the first increase in average July home prices in London area in several years bores well for the rebounding property sector in the UK.

@eugenewong794, that is a valid concern. You can see in my earnings projection, PowerSeraya net profit contribution is expected to drop by RM700 million in FY2025. Wessex may only make up a portion of the drop. I am banking on more meaningful contribution from UK Brabazon property project in FY2025 to help beef up YTLP earnings.

But a large portion of earnings rebound will come from data centre segment. The colocation data centre segment is pretty much secured for FY2025-2027 but the potential profit margin is unknown at the moment, hence a grey area for sell side analysts to push down the earnings projection.

For AI data centre segment, YTLP is looking for offtakers to fill up some 50MW capacity, according to the analyst briefing call held on Wednesday evening. This is potentially another area which I may need to adjust down the earnings projection. CUrrently in my projection, I assume 50MW of AI data centre will be up and running from early 2025.

@ckwee168, I have earlier projected for high dividends from YTL Power in my articles 2 years ago given the strong operating cashflows from its utility businesses and small capex outlay in these utility subsidiaries.

But now each subsidiary is embarking on some capex programmes, such as PowerSeraya going to build a new 600MW CCGT in 2025-2027, Wessex has earmarked capex of GBP2.5 billion for 2025-2030, and YTL DC preparing to spend up to RM20b on AI data centres.

I think the management is acting prudently by declaring a decent dividend of 7.0 sen in FY2024, and I expect dividend payouts can be higher once the AI data centres start bringing in rental income from FY2026.