AEON shopping malls have been enjoying resilient and high occupancy over 92% despite a temporary blip during the pandemic years. With the pandemic largely behind us, retails footfalls to shopping malls have come back. AEON malls are packed now again.

Furthermore, the jewels in AEON Bhd are its 28 shopping malls in communities and various townships. Its property management services segment registers operating cash flows of close to RM500 million a year. It is in fact the owner of the largest shopping mall footprint in Malaysia with 13.4 million square feet of lettable space, more than Mid Valley or Pavilion in terms of net lettable space as well as operating cash flows.

AEON has embarked on aggressive promotion for its online sales with same day delivery within 3 hours. Its online sales have jumped up many folds over the past 1 year and will continue to register triple digit growth for this year and next. Soon online sales may make up over 10% of total retails sales.

True that many people buy stuffs from online merchants or platforms but there are certain things you do not buy online from Shopee or Lazada. DO you buy a carton of milk or some potatoes and fresh vegetables from Lazada?

A major rerating is coming soon for AEON

https://klse.i3investor.com/web/blog/detail/dragon328/2022-05-20-story-h1623331448-AEON_Bhd_is_rewarding_shareholders_with_Free_REIT_shares_worth_RM7_00_p

A major re-rating factor is coming soon

https://klse.i3investor.com/web/blog/detail/dragon328/2022-05-20-story-h1623331448-AEON_Bhd_is_rewarding_shareholders_with_Free_REIT_shares_worth_RM7_00_p

Local analysts are not helping by valuing AEON at max 20x PER, while giving 50x PER to MRDIY or MyNews, and 30x-40x to Nestle or DLady

Unfortunately Bursa now is flushed with short term traders who only chase hot stocks for short term gains

At 1.50 now, AEON is the most undervalued retails stock in Bursa

A lack of explanation from the management did not help

Share price under attack now, mainly from short term traders who bet on good quarterly results

Multiple re-rating coming soon, with HSR possibly next.

https://klse.i3investor.com/web/blog/detail/dragon328/2022-05-05-story-h1622437940-YTL_Corp_is_soon_becoming_another_10x_Bagger

CIMB analyst in his report dated 18 May said that the new digital banks will aim to capture shares in the untapped value pool (revenue) of RM10 billion, out of the sector's RM91 billion. A mid sized bank like Ambank has a net profit margin of about 30%, indicating that each digital bank may potentially get a revenue of RM2 billion and 30% x RM2bn = RM600 million of net profit per year. That is slightly higher than my earlier projection of RM450m profit a year.

Dickyme pls throw to me at 80 sen. I would sapu everything you have

Maybank analyst has revised up income tax rate to 45% for FY2022 and a "normalised" 40% for FY2023 and FY2024 based on management guidance. Why still high at 40% for 2023 and 2024?? What is management going to do with it?

The income tax rate in Q1FY2022 was exceptionally high at 48.7%, Maybank report says it was due to Cukai Makmur. With net profit of RM28m in Q1 annualised to just RM112m, how much cukai makmur will be imposed? I thought cukai makmur shall be imposed on earnings above RM100m?

Can someone here (those who have registered for the AGM) please request some further explanation from the management at tomorrow AGM and some guidance on earnings in coming quarters?

just one line of explanation - "mainly due to seasonal year end annual rebate recognition in the preceding quarter". I think shareholders deserve more explanation than this.

Q1FY2022 net profit of RM28m is a little disappointing after the record Q4FY2021 net profit of RM70m?? Quarterly report does not provide sufficient explanation for the sharp drop in earnings from the Dec 2021 qtr.

Perhaps Morgan Stanley buying back cheap to average down its cost

looiting, you should go attend YTL AGM pakai koyak koyak and shoot the management on why the share price is at such a depressed level. Lets see then if they still pakai cantik cantik and talk bullshit. We support you there

For data centre businesss, nobody knows how much it will contribute to YTL profits as you said. What I have done was to put up a sensible estimate by comparing the electricity prices paid by date centre operators in Singapore vs what YTL Power will offer in Kulai by using solar power. You are free to check through my calculations and comment.

For the 5G business, as it is not under a single DNS model, every telcos will have equal assess to the 5G network and hence it is a level playing field. Yes Celcom and Maxis are long big players but what makes them special that other players like DIGI or U Mobile or YTL Yes not able to compete with them? It is a proven fact that with the right approach, a smaller player like DIGI has gained market grounds from Celcom and Maxis and made billions of profit.
Let me ask you, if Celcom or Maxis is offering a 5G package for RM55 a month, but DIGI or YTL Yes comes to offer similar package at RM48-50 a month, who would you choose?
What I am projecting is for YTL Yes to get a market share of 15% in the 5G market, while Celcom and Maxis might enjoy dominant 25%-30% each. I was using an estimated total 5G users of 10 million in Malaysia, so I projected that YTL Yes would get 1.5 million of 5G users at say RM50 per month, hence generating revenue of RM900 million a year. With telco EBITDA margin at typical 50% level, I was saying that YTL Yes could generate EBITDA of RM450 million a year.
You may challenge some of my assumptions but that is my basis.

yong1985cm, you need to understand that Singapore electricity market is a competitive merchant market, that means the pricing and margin is subject to supply and demand. The tight market in 2007-2010 already proved that gross margin to gencos could be good at SGD30-50/MWh (at times it shot up to SGD60-80/MWh) and PowerSeraya did make EBITDA of SGD300-350 million every year then.
THe oversupply situation is becoming less with weak players being wiped out (like Hyflux) and existing gencos not adding any new capacity in past few years.
Furthermore, the gas oversupply issues will come to and end by early next year and gencos will not be forced to dump prices in order to burn off the gas.
If the last tight supply cycle already caused electricity gross margin to record SGD50/MWh and above, what makes you think that the next tight cycle will not push it to SGD50/MWh again?
Haven't you seen a tight cycle could push average selling prices of gloves to above USD100 per 1000pcs from normal USD25-30? Haven't you seen that semiconductor players are making double or triple profits during this current tight supply cycle?

That may be right. The company needs to do something to reward long term shareholders, not just gives ESOS at cheap prices to themselves and employees. It should embark on aggressive share buyback to at least support the share price, like what IGBB has been doing.
With improving operating cash flows, the company should increase the dividend payouts as soon as possible. When the price is right, it should sell some of the assets to realise profits and return special dividends to long term shareholders.

Maybank IB raised tp for BJfood to RM5.70 which is fair to me at 9.5% free cash flow yield, though I think a valuation close to 8% FCF yield or RM6.75 would be better, given that BJFood is still in the growth phase.

Total borrowings came down from RM286 million from one year ago to RM191 million, indicating strong cash flows to pare down borrowings in H1FY2022. Debt repayment has slowed in Q3, showing that the debt level of RM191m is comfortable to the management.
Capex was still modest at RM46m in first 9 months of FY2022 after BJFood opened a total of 18 new Starbucks store YTD.

Another superb quarterly result. It shows that the strong retails spending in Q42021 had continued into 1Q2022. Strong cash flows of RM156 million for 9 months FY2022, annualised to RM208 million or 54 sen per share!

I adore Warren Buffet more, he is sharp and daring, always does what is best for the shareholders. He got a good deal in OXY and HP.

ryan7642, haha not really a hardcore fan, but I do receive complaints from a few friends who bought high at above RM1.00. Then I looked at it and found that there is a good chance for the company to rebound strongly this year and next. Ya let's earn big together, nice!

Of course we need to assess what YTL management will be performing in next 24 months. If there are plenty of good assets up for grab and YTL would still be sitting on a huge cash pile after 2 years without making any significant acquisition nor distributing higher dividends, then I would be also very unhappy. We should all then go and attend the AGM and try to vote out the management and vote against any director fee payment to the directors.

You may choose to sell off YTL if you think it is too slow, or you may prefer higher dividend stocks like Astro, but the share price of Astro also does not go up though it has been giving dividend yields of over 8% p.a.
You may have bought into SCGM that just declared a windfall dividend after it sold off its core business to the Japanese. You might enjoy the special dividend from SCGM but what is next? No more already as it will take many years before the management of SCGM could find another business to develop into the size of the core business it just sold.
I wouldn't like any of these but prefer some company that gives decent dividens while I can ride on its growth for many years to come.

Nothing is absolutely right or wrong in business, just like you never buy a stock at the lowest and can never sell a stock always close to the peak. I have conviction in this YTL management to deliver this time round.

YTL has increased its borrowings when buying up good assets in the past 10 years. It takes time for these assets to develop and increase value to a certain level for YTL to lock in profits. For example, when it bought the Niseko land at just USD60 million and quickly sold it off at say double the price in the following year, then it would have missed out on the explosive value growth of the Niseko land in past 5 years, which has ballooned to a market value of USD2.0 billion. Of course it is now subjective as to whether it is the right time to sell it. One may say a capital gain of over 30 times in few years is very good already, but another may say if you sell it now, what if the land value became USD10 billion 10 years later??

It would be nice to get a supernormal dividend now from the company but that cash dividends received by us now might be hard to generate more income than it would when sitting at the company. Small investors like us may buy some stocks at cheap prices but it would be very difficult for us to buy up a good asset of say RM1.0 billion that could give good returns. But YTL is now in a good position to look for bargain sales. It would be nice if it could get another choice landbank like the Niseko land at distressed price, or buy into another world class hotel like The Marriott at Sydney Harbour.
For a start, YTL will deploy some of its cash into good use by developing the digital bank it owns with Sea Group.

It is easy to say to distribute out all cash in balance sheet and close down the company. I hold a contrarian opinion, in fact I think the best is still to strike a good balance of giving decent dividend yields of 6%-7% p.a., while maintaining a good cash warchest to get ready to scoop up good assets at bargain sales. And I think good opportunities are coming in next 2 years as US interest rate hike cycle kicks off aggressively and soon we may see many companies going into bankruptcy.

I think the YTL management has been trying to pay dividends as generously as they can. YTL has given out a total of RM28 billion of dividends in past 10-15 years. In the past 2 years FY2020-2021 when it made a small accounting loss, YTL still paid out 2.5 sen of dividends.

Yes dividend payouts have been cut down in past few years as business operations of its subsidiaries were affected by covid-19 pandemic and other reasons, but things should be looking up again soon.

I expect better results in this coming March quarterly result but may not have any big surprise.
I do agree with you that it is unusual for YTL Power to have such active trading volume in past 4 weeks. The peak volume of over 100 million on 8th April 2022 clearly indicated strong fund buying, likely to be foreign funds as local funds like EPF had been selling.

KC, good analysis and well written!
Agree with you that while there are so many other undervalued stocks with much stronger balance sheets and assets, why bother to look at Subur that may go into bankruptcy if palm oil prices drop back to pre-pandemic levels?

Xiaochen, I can understand your frustration. Many minority shareholders have been suffering from depressed share price of YTL Power in past few years. I have friends who bought into YTLPI at about RM1.50 per share and they are cursing the stock like hell.
I would call for patience and I think the re-rating time is finally arriving. If you have been holding it for 5 years or more, why not hold a bit longer to see if the share price will go back to the level you first bought? I foresee good share price rebounds back to RM1.50 level within the next 18 months.

JJPTR, as per YTL Corp quarterly report ended 31 Dec 2021, it had cash of RM2.815 billion and another RM8.579 billion of fixed deposits, total RM11.4 billion cash.
The total debts of RM11.7b + 31.998b should have included debts at Wessex and Jordan as YTL Corp owns some 55% of YTLPower and so should have consolidated all the cash and debts of YTLPower.

Anyway I believe the outlook of YTL Power is becoming better with multiple re-rating factors coming in next few months - higher dividends from FY2022, Jordan power plant to start commercial operations in 2H2022, PowerSeraya earnings to rebound strongly, digital bank business to kick off from mid 2023, potential win of power import bid from Singapore, continued clinching of more data centre deals in its Kulai data centre park, etc.

That is why there were 216 shareholders who voted against this director fee payment during the last AGM. I would have voted against it too if I were there. I think they should have been paid just the RM1,000 attendance fee for each board meeting attended and no more.

There should be some misunderstanding there when one claims that Yeoh directors got fat salary and director fees. The Yeoh directors have actually foregone their salary and director fees for 2 years when the company was making losses. The total fee of RM842k for non-exec directors was not too excessive though I reckon that they might not deserve it given the company has not performed in past 3 years.

xiaochen, I agree with you that dividends are important to minority shareholders like us. Dividends have been down to 4.5 sen to 5.0 sen in the past few years, that is discouraging. But I believe YTL Power had really no choice but cut down dividends in past few years due to non-performance of its few subsidiaries like Yes telco business due to competitive environment and PowerSeraya due to over-supply situation in Singapore electricity market then.
I think the bad times are behind us and the outlook of YTL Power is turning brighter. They have just delivered a couple of good news in the past 3 months - 1) disposal of Electranet for RM3.05 billion cash,, (2) the launch of green data centre in Kulai with the first 72MW under construction and another 162MW contract signed.
Hopefully YTLPI will declare higher dividends for FY2022 with its nett cash position now. I am hoping for at least 7.0 sen for FY2022 and then hopefully 10 sen for FY2023.

Assuming every 5 years forward, Wessex would incur same capex and RCV would increase by same 500 million pounds, then returns to equity would go up to 3.4% in 10 years, 3.7% in 15 years and 4.0% in 20 years.
My point is that for a fund that invests in Wessex now, it will get increasing yields / returns on equity over time. Regulated assets like Wessex is so valuable that many long term funds are looking to buy but owners will not sell anything cheaper than 1.5x RCV now.

If a fund buys into Wessex at 1.6x RCV now, or for an equity value of 1.6 x 3.566bn - 2.315 bn = 3.39 billion pounds, then the fund would get a return on equity of 98m / 3390m = 2.9% p.a.
This may look low but still much higher than 1-year Libor of 2.01% and 5-year US treasury bond yield of 2.5%.
If the fund holds onto this investment in Wessex for 5 years, then RCV would have increased by 500 million pounds to 4,066 million pounds. Assuming interest rates remain at 2.0%, then Component B revenue would go up to:
4,066m x 4.5% = 183 million pounds per year, or an increase of 23 million pounds just from a larger RCV 5 years later. Of course borrowings would have gone up larger too, say for a total capex of 1.0 billion pounds over next 5 years, at 70% gearing, borrowing would have gone up by 700 million pounds and interest costs per year would have gone up by 14 million pounds, so cashflows to equity would have gone up by (23m - 14m) = 9 million pounds p.a.
The the return to equity for the fund would go up to (98+9)m / 3,390m = 3.16%

Take the example above, Wessex generated component B revenue of 160 million pounds from curretn RCV of 3.566 billion pounds and at a WACC of 4.5%, giving a return on asset (ROE) of 4.5% (160m/3566m) and return on equity of 8.0% (cashflow to equity = 166m - interest paid 68m = 98m divided by equity value of 3.566bn - 2.315bn debt = 1.251 bn).

Long term investment funds like retirement funds love these regulated assets which give them secured and steady and growing income & dividends. The Australian superannuity fund just bought over Electranet at 1.6x RCV from YTL Power. That clearly explains why these assets can really sell at 1.6x RCV, which is my valuation for Wessex.

If Wessex makes lots of profits, eg. earning a big bonus from outstanding operating performance, getting lower interest rates than expected, spending much less capex than required or reduced operating costs, then Wessex will be able to distribute more cash to YTL Power as dividends.
For instance, if Wessex were to make an IPO listing of say 30% of its shares in London stock exchange at 1.6x RCV, then it would raise funds of close to 1.0 billion pounds. After deducting about 300 million pounds for the equity portion of the required 1.0 billion pounds of capex for next 5 years, the balance of 700 million pounds of IPO proceeds could then be distributed out as dividends to YTL Power.