Lastly for future projects, interest costs and costs of doing new projects will be higher as interest rates move higher, but this disadvantage is felt by everyone else so it will not impede YTLPI's advantage in securing good lucrative projects like the green data centre deals or power export to Singapore.

Thirdly for PowerSeraya existing loans, interest costs will be higher as interest rates move up. This will be a strong reason for YTLPI to list up a portion of PowerSeraya stakes and raise money to pare down its borrowings.

Secondly for existing loans already secured under Wessex or to be secured for its capex expansion plan, the liquidity in the UK is huge and any interest rate movement will be taken care of by the water tariffs that always reflect cost of debts and level of gearing. For you info, the water tariffs for every 5 years will be set higher when interest rates are seen moving up to properly remunerate the 10 water companies in the UK for spending capex to maintain or upgrade the water assets there.

Higher interest rates may not have direct impact on its profits going forward. Firstly for existing project like Jordan power plant, financing is secured on project financing basis ring fenced to the project company level based on a fixed margin over LIBOR or similar. Typically the project company will enter into interest rate swaps to protect itself from interest rate fluctuations over the tenor of the project financing.

Multiple re-rating factors coming soon

https://klse.i3investor.com/web/blog/detail/dragon328/2022-04-22-story-h1621549755-YTL_Power_is_potentially_a_10x_Bagger

EPF needs cash for latest round of withdrawal by members up to RM10k each or estimated RM30-50 billion cash

With economic activities almost fully re-opened, YTL's construction and cement division may soon be becoming the largest profit contributor to the group.

With JB_Gemas multi-billion double track rail project well on track, construction division will contribute substantial earnings over next 2 years.

With the recent hikes in cement prices and full consolidation of YTL Cement into Malayan Cement that controls over 68% of Malaysia cement market share, the cement division will take off in coming months with few hundreds of million of profits in 2H2022.

YTL Power is currently enjoying a powerful re-rating which may take its share price doubling to RM1.50. If that happens, it will add another 30 sen of value to YTL's valuation.

Longer term prospects may include the revived KL-Singapore High Speed Rail project which it clinched the southern portion earlier before it was suspended, and a bigger high speed rail project linking KL to Thailand which may cost close to RM100 billion.

In terms of earnings prospect, it is certainly looking up for YTL this year. YTL Power earnings have bottomed up with Wessex & PowerSeraya contributing steady earnings and new projects coming up (Jordan power plant, solar farm, data centre, power export to Singapore, etc).

Cement division is looking even better with the recent hikes in cement prices in Dec 2021 from RM200-210 to RM270 per tonne, YTL's 77%-owned MCement may rake in net profit of almost RM1.0 billion for 2022 if cement prices stay at RM270-280 per tonne throughout the year.

Digital bank licence is a feather to the cap. YTL Corp is already very undervalued.

Its stakes in listed subsidiaries (YTL Power, MCement, YTL Hosp REIT and Starhill Global REIT) is already worth more than 70 sen per share. Minus nett debt of RM945m at holding company level, YTL is worth at least RM0.70 - 0.09 = RM0.61 per share.

At current share price of RM0.62, you are getting all its unlisted assets for free! The unlisted assets include YTL e-solutions, ERL, construction arm and Niseko landbank (itself worth 44 sen at market value).

A quick way to realise the value of Wessex is to list it up in London stock exchange by selling away say 30% stakes. Then YTLPower would get immediate cash of RM5.2 billion while retaining 70% control over Wessex that will have a market capitalisation of RM17.48 billion.

Did he mean that if we apply the same 1.6 times RCAB for Electranet on Wessex, we shall get an enterprise value of RM30.43 billion for Wessex?

If this is so, then the equity value of Wessex shall be RM30.43b - RM12.95b = RM17.48 billion or RM2.13 per share of YTLPower.

As MIDF pointed out in its report today, YTLPI disposed Electranet at a good premium of 1.6x regulated asset base. MIDF sees great value in its 100%-owned Wessex Waters that has a regulated asset base of RM19 billion. MIDF estimates an equity value of RM13 billion for Wessex, or RM1.58 per YTLPI share. An estimated equity value of RM13 billion plus debts of about RM13 billion at Wessex company level, valuing it at enterprise value of RM26 billion or 1.37x RAB.

Should we value Wessex at 1.6x RAB as in the case of Electranet, Wessex would be valued at RM30 billion and YTLPI's equity value in Wessex would be worth RM30 -13 = RM17 billion or RM2.07 per share.

You can run now and get few sen profit and wait for better entry price, or you may lose out bigger gains once profit taking is over.

This company is in mega infrastructure projects that take time to take off, and it owns perpetual regulated assets that always appreciate in value over time.

Right, MS made a mistake before by buying Media high at RM1.00 or above, now making another by selling low. It may continue selling 1.0-1.5 million shares per day as share price stays above 60 sen for another 2 months then its stake will become insignificant.

@choysun, we cannot read the article that needs subscription. Could you copy and paste the relevant paragraphs here?

@Faridfet, which research house announced a target price of RM2.90 for AEON?

@faridfet, this sounds good to me. Aeon management should set KPIs to be achieved for this amount of money spent, eg. sales increase for certain products or certain improvement in inventory control and hence cashflows.

The big block of 1.0 million shares blocking at 1.57 has been snapped up this morning. Today is the last day for calculating the settlement price for AEON-C10, so it does not matter if AEON share price shoots above RM1.60 today as the average for last 5 days will be less than RM1.60 and CIMB has succeeded in getting a zero settlement for the C10 call warrants it issued.

after today, there is no more reason for CIMB to block AEON from going higher. Incidentally, Maybank IB this morning issued a technical Buy on AEON with short term tp 1.65 then 1.79.

AEON share price dipped to 1.46 low yesterday on weak market sentiment but has since rebounded to challenge month high of 1.56.

These has been a big seller of over 1.0 million shares queued at 1.57 everyday in past few days. I suspect this seller is CIMB IB who issues the call warrant AEON-C10 that expires on 31 March. CIMB IB has all its reason to block AEON share price from reaching 1.60 so that it will not need to pay a single sen to settle all the call warrants C10 it has issued. Very wicked intention.

He mentioned that AEON has spent close to RM10 million installing solar panels at Taman Maluri and Alpha Angle malls. This would be for about 4.0 MW of solar power and would save abour RM2.9 million of electricity costs per year.

It is capex well spent as AEON would recoup investments within 3 years after incorporating green tax incentives.

Just imagine if AEON were to spend another RM100m capex to install solar panels in other 20 malls, it would save RM29 million of electricity costs every year for the next 25 years. This would raise earnings by 2.0 sen per share every year.

I particularly like the AEON Sayap Bagimu sustainability initiative mentioned by the CEO. Shafie says AEON brought in 400 suppliers comprising small enterprises in 2021. This is very smart and a win-win strategy, providing a platform for small enterprises to multiply their sales and at the same time broadening product offering especially local quality products and increasing sales for AEON.

This indirectly reinforces AEON's status as a community mall, supporting local small enterprises around and providing more product choices to the local community.

He was optimistic of AEON's prospects for 2022 with the gradual reopening of the economy. He noted that AEON non-essential businesses were closed for 119 days in 2021.

With the omicron wave coming to an end and no more MCO in vicinity, there is no reason why AEON will not perform better this year than 2021.

In last Saturday interview with The Star paper, AEON's CEO stated that the planned capex of RM200-250m for 2022 would include capex for a new departmental store. He also mentioned that the company has installed solar panels in Tmn Maluri AEON mall and would consider installing solar panels at other 30 malls that it owns.

I consider this amount of capex to be reasonable for good capital investment programs like roof-top solar panels and a new departmental store (instead of a more expensive new shopping mall).

As seen before in 2021, Morgan Stanley would not sell Media below RM0.60. Good chance to collect!

Even if we do not look at SOP valuation but look at cash flow valuation, it points to the same fact that YTLPI is grossly under valued at 67 sen.

Maybank projected operational cash flows of about RM2.5 billion per year for YTLPI in next 2 years. If we exclude expansion capex for a moment (i.e. if we assume YTLPI would not expand into any new venture that requires big capex), its free cash flows would top RM1.6 billion or 20 sen per share.

It would easily be able to declare dividends up to 7 sen or 10 sen per share every year in steady states with current asset. At 5% dividend yields, YTLPI should be valued at RM1.50 to RM2.00 per share.

Using estimates above, YTLPI should be worth additional 21 sen from Wessex and 40 sen for PowerSeraya.

This would take its SOP valuation from 90 sen to RM1.51 per share.

If we look at cash flows valuation of PowerSeraya, it should be worth at minimum price-to-FCF of 20x (or 5% dividend yield). Using Maybank projected earnings of RM200m from PowerSeraya, it should be worth at least RM4.0 billion or 48 sen per share of YTLPI.

Another crazy thing in Maybank's SOP valuation is that it did not ascribe any value to PowerSeraya, the second largest power company in Singapore.

While Maybank itseld projected that PowerSeraya would contribute RM196m to RM250m per year to YTLPI, it makes no sense to attach a zero value to the company.

While PowerSeraya is not a regulated asset, it still owns substantial power generation assets, land, oil tanks and more importantly a limited generation licence in Singapore. At the worst, PowerSeraya should be valued at cost or at least SGD3.0 billion. Minus out estimated debts of RM5.8bn at PowerSeraya, it should be worth RM9.0bn - RM5.8bn = RM3.2 bn or 40 sen per share of YTLPI.

Maybank IB iteself projected earnings contribution of about RM360 million from Wessex to YTLPI. How could Wessex be valued at just RM3,587m or 10x earnings or 10%-12% dividend yields for a top-notched regulated asset in a low interest environment of 1% in the UK?

The sale of Electranet at below 2% dividend yields has proven that such regulated asset should be valued at max 5% dividend yield.

As such Wessex should be valued at minimum RM7.0 billion or 88 sen per YTLPI share. This would actually just value Wessex at a 1.09x RAB.

Local analysts here do not know how to value regulated assets and do not appreciate how valuable such perpectual regulated assets are.

In Maybank's SOP valuation of YTLPI, it attached a value of RM3,587 million to Wessex. I think this is grossly under valuation of Wessex business.

Wessex has a RAB of GBP3.36 billion or RM19.3 billion as of 30 June 2021 and Maybank's estimated debts at Wessex at Jun 2021 was RM14.00 billion. If Wessex is valued at 1.0x RAB, then the equity value of Wessex would be RM19.3 bn - RM14.0 bn = RM5.3 billion or 65 sen per YTLPI share.

This would be at least 21 sen higher than Maybank's estimated value of 44 sen.

This raised its nett cash level in holding company to RM1.90 billion or 23 sen per share. This cash shall come in handy when YTLPI continues to pursue long lasting profitable new ventures like setting up solar power plants and data centres.

The more important thing is value and cash flows. Maybank IB just upgraded YTLPI target price to RM0.90 after YTLPI completed the disposal of Electranet and received RM3.0 billion cash.

It was a big mistake for EPF to sell YTLPI below RM0.60 and now it is buying back above RM0.60. It is like the case of Astro too, EPF was selling at RM0.97 and now buying back above RM1.00. It bought lots of glove stocks few months back then was seen selling off slowly over past few months. I will not read too much into EPF trading pattern.

Furthermore, Bplant is generous with dividend payouts. It paid out total 8.4 sen of dividends in 2021. With CPO prices hovering above RM6,000 per tonne, Bplant is expected to record higher profits and declare dividends over 10 sen in 2022.

One more advantage BPlant has over other planters is that all of Bplant's plantation land is located in Malaysia, none in Indonesia. This makes a big difference as the realised CPO sale price from Malaysia is close to market price RM6000+ per tonne while palm oil export from Indonesia will be subject to maximum USD575 (or RM2,300) per tonne of export duty & levy

Bplant also seldom sells forward so it benefits maximum from current high spot prices of CPO.

With edible oil supply becoming very tight and suitable plantation land limited, palm oil estate land will become very much more valuable in future. Plantation land will be worth easily RM70,000 per ha as people scramble for land.

If Bplant 65k ha planted land is revalued to RM70k per ha, then it will be worth 65k x RM70k = RM4.55 billion or RM2.03 per share.

Plus the market value surplus of its 9700ha land near township, Bplant should be worth RM2.03 + RM0.90 = RM2.93 minimum

BPlant is one of the cheapest plantation stock in Bursa. It has over 65,000 ha of planted palm oil estates, now valued at just RM35k/ha or 35 sen psf.

It also has 9,700 ha of estate land nearby town which could be monetised at much higher price than normal plantation land. These land plots are valued at just RM893m or RM91.7k per ha or RM0.85 psf in book value. Recall that Bplant sold off its 664ha of land in Kulai for RM429 million or RM646,084 per ha or RM6.46 psf. Assuming that Bplant can monetise these land parcels at half the valuation or RM300k per ha, this 9700ha land will be worth RM2.91 billion or RM1.30 per Bplant share. This would add RM0.90 to its book value.

Now Bplant current book value is already RM1.31 per share and would increase to RM2.21 if the 9700ha land is monetised or revalued to market value.

Shareholders of AEON have been suffering in declining earnings and depressed share price since 2012 for the over spending in past few years. For 10 LONG YEARS, shareholders have been suffering enough.

For no new mall addition, if the management is asking shareholders for RM200m-300m of money every year, I would tell them to go fly kite.

If the CEO is asking for capex allocation of RM200-300m p.a. for the next 2-3 years, he must deliver better earnings for the next 3-5 years. DO not just ask money from shareholders but under deliver.

If AEON has its debts exceeding RM600m again by year end and fails to deliver over RM100m in net profit for FY2022, he must go. No more excuses. Simple as that.

I do not know what made the CEO cautious of this year prospects. He must deliver better results than last year which had almost 2.5 months of total shutdown of its shopping malls. This year also sees another RM10k EPF withdraw which will inject RM30-50 billion of cash into households' spending.

Every single capex program whether on mall rejuvenation or on IT/technology must be able to achieve a KPI return of 12% IRR or higher, or provide a payback within 7 years. For a RM100m spent on a mall rejuvenation project, AEON management must ensure that it will improve lettable area or footfalls in the mall so that it will provide higher income of at least RM12m p.a. after the capex improvement.

For every single capex program, the management must exercise caution and set reasonably high KPI for expected returns, otherwise just do not spend it.

Should learn from DKSH who spent about RM30m on internal improvement programs which almost immediately lifted up profits by over 30% or over RM20m in the following year.

For example, the capex spent on installing solar panels at AEON malls is well spent as it will pay back within 3 years, i.e. capex of RM100m shall give total returns of RM100m in 3 years in the form of tax rebates / savings and electricity cost savings.

I wonder if the spending of RM50m to RM75m p.a. on technology will give what sort of returns. It is not a small sum. If used in paring down debts, it will save interest costs of RM2m to 4m p.a. The management should use similar benchmark when deciding on each of such capex program.

AEON management must be prudent in new capex spending and must learn its own mistakes of lavish spending in previous years from 2013-2018.

If they target capex of RM200m to 300m a year for next 2-3 years, it is still acceptable and can be fully funded by internally generated cashflows without the need to raise more borrowings. They must remember that they still have hundreds of million of debts sitting there to serve.

Take a middle figure of RM250m capex a year, 30% or RM75m for technology a year is a bit too high. They have to ensure this amount of capex shall be able to improve sales and profits and get back investment returns within 5 years.

40%-50% capex or RM100-125m a year on mall rejuvenation programs seem reasonable without any new mall building. Again such investments must provide immediate returns to increase sales and rental income.

The remaining 20%-30% capex or RM50m - 75m for maintenance is within the ballpark.

I would look at annual operating cashflows of RM376m or 27 sen per share before capex. No matter how they slice it, there would still be positive free cash flows of over RM100m to RM300m. I would prefer them to spend less in the next 2-3 years, eg like RM50-70m p.a. like in 2021 to build up cash and return debts further first before embarking on more aggressive capex programs.

As long as edible oil supply is tight, palm oil prices may go up double or triple to beyond RM10,000 per tonne.

The logic is simple. While a household may spend RM200 per month on petrol or diesel for car usage, when crude oil prices jump from USD80 per bbl to USD120 per bbl, RON97 prices jump from RM2.40 per litre to RM3.60 per litre and household spending on petrol will jump up 50% from RM200 to RM300. It hurts as the cost increases by RM100. Consumers may use car less or take public transport to reduce costs.

But a normal household typically consumes 2 litre to 3 litres of cooking oil per month, that costs about RM10-15 a month. If palm oil prices double from RM5,000 per tonne to RM10,000 per tonne, cooking oil prices may rise from RM5.00 per litre to RM10 per litre and household spending on cooking oil may increase from RM10 to RM20 per month. Cooking mama may not even blink but still buy cooking oil even prices have doubled, simply because there is no alternative. People will not just eat steamed or boiled food!!

The big drop in CPO prices last Friday was a knee-jerk reaction to Indonesian government announcement to lift export ban. Indonesia producers took the opportunity to export more before the new max export duty/levy kicks in.

However, palm oil producers will soon realise that more and more potential buyers are coming into markets to look for palm oil supply, as sunflower oil supply and inventory dries up. Producers will not rush into selling cheap palm oil as the supply demand balance is soon going into severe supply deficit.

India already imported less in February and has its edible oil stock inventory running low. When it realises that it is not able to get any other edible oil cheaper, India will turn back to palm oil again and order more to fill up inventory for upcoming festivals.

Wait and see when Europe countries also run out of sunflower oil like in Denmark, who cares if palm oil rises to RM7,000 per tonne. Securing supply for domestic cooking oil will become the priority, otherwise consumers will take to the street when the supermarket shelves become empty of cooking oil.

With Indonesia lifting the export ban but raising the export duty & levy to max USD575 per tonne, there is no incentive for Indonesia palm oil producers to export palm oil at current prices. I expect more than 30% of Indonesia palm oil supply will be taken out of export market to supply to domestic market.

With current Indonesia domestic market prices hovering around USD1,100 per tonne and Indonesia government trying to cap domestic cooking oil to about USD1,000 per tonne, Indonesia palm oil producers will be incentivised to export palm oil only when CPO prices rise to USD1000 + 575 = USD1575 or RM6,300 per tonne.

This is well expected as Russia Ukraine accounts for 75% of world sunflower oil exports. Ukraine will likely miss this spring seeds planting and sunflower oil supply will be extremely short till year end. Just imagine that almost 9.0 million tonnes of sunflower oil supply is being taken away from markets, which country can fill the gap?

Anyway this telco business division does not form any value to YTLPI's SOP valuation, investors have long written off the investment in this division. The important thing is to ensure this division will not drain off any more cash.

Even if YES were to pay an annual fee of RM400m for access to the 5G network, it would need to get 500k new 5G users at monthly fee of RM100 to get 500k x RM100 x 12 = RM600m additional revenue per year to make money. It is not a tall order as it already has 2.5m user base and it will have equal quality of 5G network to offer as by other big telcos.