According to latest data, foreign funds net bought a total of RM12 million worth of YTL shares and RM10 million worth of YTL Power shares yesterday. Local funds also net bought a total of RM15 million worth of YTL Power shares yesterday, hence the rally in share price yesterday.

The past few days of data shows that foreign funds are mixed / divided in YTL and YTL Power, some are taking profits, others are buying. Or some funds take profit on price strength and buy back on price weakness.

As YTL Power is very cheap at 11x PER for a large utility and AI play, despite the 7x increase in share price in one year, it makes the decision to buy or to take profit on YTL Power rather difficult to fund managers. Hence I do not expect foreign funds selling on YTL and YTL Power to be significant in next few months, after trimming more than half of their holdings in May and June 2024.

@Ravetidus, the prefab bathroom unit (PBU) of NSL in Finland may not be doing as well as expected, but still the note says that NSL expanded its Finland capacity from 7,000 units to 10,000 PBUs per annum in 2023. That may be timely to meet internal demands as YTLPower's property unit in the UK is developing the largest township in Brabazon and on track to deliver 6,500 new homes there in next few years. That will add demands for 20,000 PBUs assuming each new home has 3 bathrooms.

On its AI data centre division, I estimate YTL Power has at least secured some 180MW of AI data centre jobs from Nvidia and big clouds, which will keep it busy until 2025.

It may be true that big clouds like AWS and Tencent have slashed prices for their cloud computing services substantially in recent weeks, but we cannot judge from this that the AI boom is over. It is too early to tell. There may be various reasons for these 2 big clouds to slash prices for their cloud services, such as roll over of AI chips to more powerful GPUs / monetising all the old chips, grabbing market shares for the current financial year etc. I will not speculate on that. We can get more clues when Nvidia announces its quarterly results in August 2024 and any guidance it will provide then for 2025.

@DevOpsEngineer, I beg to differ on your opinion above.

I think YTL Power will report slightly better profits in upcoming Q4 FY2024, compared to Q3 FY2024.

Yes Singapore USEP was depressed since early June to mid July, and hence it affected any long generation into the pool by PowerSeraya, and indirectly also affected certain retails contracts that are linked to the wholesale pool market. But based on the secured retails contracts that make up over 80% of PowerSeraya's revenue, PS should be able to report similar level or slightly better earnings in Q4 compared to Q3 FY2024.

We cannot compare this Q4 FY2024 result with last year Q4 FY2023 which was boosted by two extraordinary items: 1) commissioning profits for Jordan Power after it achieved commercial operations for its second unit in Mar 2023; 2) extra long generation profits of estimated SGD30m for PowerSeraya due to spiking pool prices then.

@Jesse1314, I tend to agree with what you said above. Ofwat is seen or must be seen as a regulator to protect consumers' right and to ensure water companies deliver excellent services to the consumers.

No doubt, water companies in the UK have been reaping rewards year after year up until Covid-19 pandemic, YTL Power had been getting good dividends from Wessex for many years since its take-over in 2002, something like GBP60-80 million every year from 2002 to 2020 totalling over GBP1.2 billion, way more than the equity money invested in the 2002 take-over.

It is time for UK water companies to reinvest the capital to improve water assets and deliver better services to water consumers. The good thing is that every pound spent on capital expenditure will be added to the Regulated Capital Value (RCV) and will be renumerated back to water companies in the future through increased water tariffs.

Unfortunately the market seems to be having the typical sell-on-news attitude without looking at the long term merits and synergies of NSL to YTL group.

Most just focus on short term issues like a headline loss making NSL in 2023 and increased gearing for YTL.

I would look beyond these short term glitches.

HL analyst is more optimistic of the deal. Current rental rates at Tropicana Gardens Mall is around RM5.00 psf, so annual rental income will be 1.05m sf x 77% x RM5.00 psf x 12mths = RM48.5 million. Hence the acquisition price of RM680m will provide a gross yield of 7.1%.

However, Tropicana Gardens Mall is currently loss making. The analyst is optimistic that IOIPG will be able to improve the mall footfalls and potentially double up the gross rentals in 5-6 years, just like what IOIPG achieved from its IOI City Mall (which was loss making in 2014 when opened but now is the largest shopping mall in Malaysia with average rental rate of over RM10 psf).

@stockpicker888, yes the immediate reaction from most investors to IOIPG's latest acquisition should be the escalating gearing ratio which will increase from currently 0.73x to 0.92x after these 2 acquisitions from Tropicana and the acquisition of SHenton House project from the CEO at S$1.0b.

The share price should see muted reactions today as the acquisition of the Tropicana Gardens Mall was well expected, and is part of the package deal with Tropicana after the acquisition of W Hotel, KL and Courtyard by Marriotte, Penang in Dec 2023 and early 2024.

NSL is the leading supplier of precast concrete components in Singapore. The prospects for NSL are bright as there will be mega construction projects taking off in Singapore in near term:
1) Changi Terminal 5 - S$10b
2) Integrated Resorts (Marina Bay Sands and Sentosa) expansion - S$9b
3) Tuas mega port - S$20b
4) MRT projects - S$57b
5) various new data centre work in Singapore and Johor - RM30-40b (YTL Power's data centre jobs alone will contribute over RM20 billion of internal construction orderbook to YTL)

NSL was profitable in 2023 if not for an impairment loss, excluding that NSL made a net profit of S$16 million. And it had a net cash of S$103m, minus out net cash, the net acquisition price of (S$280m - S$103m)= S$177m actually values NSL at just 11x PER.

@cktay, I have indeed suggested to YTL Power management to consider a listing of Wessex Waters in the UK, while I do not think they will dispose off Wessex entirely.

Wessex is a prized asset with a perpetual license to serve some 3 million customers in Bath, UK. The regulated asset model of the water industry in the UK is suffering from a temporary setback due to extraordinary high inflation and high interest rate environment in past 3 years due to Covid pandemic and Ukraine-Russia conflicts.

If we look past this temporary setback in past 3 years, the business and water assets have great long term potential for decades to come, with regulated asset base to double up every 8 to 10 years, eg. from GBP3.5b in 2022 to GBP7.0b by 2030. Just imagine, its regulated asset value may double again further to GBP14b by 2040 and GBP28b by 2050. Then if we value Wessex even at 1.1x RCV, it would be worth over GBP30b or RM180 billion, minus out 67% debts, the equity value would be close to GBP10b or RM60 billion then.

As a long term investor, YTL Power typically will not part with a prized asset easily, especially if the company is not in need of cash.

It looks like a good deal to YTL in the acquisition of NSL Singapore. That will help YTL to expand its cement and precast concrete business markets to Singapore, Dubai and Finland.

The acquisition price is at a discount of about 20% to book value, but there is no info on NSL earnings.

This acquisition will help YTL to bid for construction projects in Singapore, Dubai and UK area. Particularly in the UK, YTL is doing the construction work for Wessex's massive capex programmes of GBP3.5 billion in 2025-2030, as well as Brabazon property projects worth GBP1.3 billion over next few years. These 2 projects will contribute almost RM29 billion of construction order book to YTL Group in the UK alone.

@stockpicker888, this latest acquisition by IOIPG of Tropicana Gardens Mall seems to be a good deal, purely looking at the acquisition price at a big discount to the book value of RM944 million. Though the mall is only 77% occupied, but it has over 1.0 million sf NLA which is big. And the vacancy of 23% provides upside to future rental income.

The announcement does not contain any info on the existing rental income of the mall, so I am not able to calculate the rental yield.

Do you have any info on that? What do you think of the latest acquisition?

I need to write something not so good on YTL Power, so that my posts will be seen as more balanced, also to give a more impartial view on the company prospects.

Due to the weak second draft determination by Ofwat, especially the WACC currently set at 3.71% (improved from 2.9% in 1st determination but still much lower than 4.3% as Wessex applied for), Wessex's earnings will take a beating from 2025-2030 with net profit reduction of RM150 million in FY2025 up to RM240 million reduction in FY2030 to YTL Power, if the final determination in Dec 2024 still sets it at 3.71%.

If this is indeed the case, I will look to reduce my earnings projection (EPS) of YTL Power to the following:

FY2024 - still 39 sen
FY2025 - 44 sen, down from 46 sen
FY2026 - 57 sen, down from 60 sen
FY2027 - 63 sen, down from 66 sen
FY2028 - 76 sen, down from 80 sen
FY2029 - 83 sen, down from 87 sen
FY2030 - 85 sen, down from 89 sen

@stockpicker888, I cannot be seen as purely promoting this stock, otherwise my posts will be removed, just like many of my posts in YTL Power forum have been removed for "over-promoting" the stock, which may have angered certain powerful parties.

I have to criticise IOIPG in some way or another.

it is heavily biased to certain parties

If these posts are removed again, this shows this platform is no longer impartial

Since Dec 2023, foreign funds scooped up lots of YTLP shares and local institutional funds sold substantial stakes in 2022-2023, now foreign funds are taking profit while local institutional funds and local retailers are buying over these tickets. I think local institutional funds are getting it right this round by selling the NU stocks to foreign funds and switching to YTLP.

Foreign funds have been buying the NU stock in a big way lately, but I feel that they are betting on the wrong horse this time

In comparison, the national utility is trading at 21x FY2024 earnings and 18x FY2025 earnings.

It seems that any of my posts that promotes YTL Power stock will be removed. Certain fractions are blocking me to write anything good on YTL Power.

Fine. I am not promoting YTL Power then but just stating the facts:

YTL Power PER is at 12.1x FY2024 earnings, falling to 10.5x FY2025 earnings then just 8x FY2026 earnings.

Of course, I also admire the low profile style of IOIPG management, working tirelessly to bring good projects to fruition, eg. IOI Central Boulevard and IOI City Mall Phase 2.

I was criticising the investor relation department of IOIPG for not doing any damage control or any public / investors relation after the related party proposal, letting the share price dropping in a free fall. I still think the investor relation department should take the blame.

@stockpicker888, it is too early to tell. That's why I said there was a SLIM chance of a privatisation of IOIPG by its major shareholders. And I still believe the major shareholders will do the right things not jeopadizing minority shareholders' interests.

Foreign funds have been buying big on Sunway, mainly driven by the prospect of it setting up a healthcare REIT to house the various Sunway hospitals. The listing timing is projected to be in 2027 and the potential valuation may be stretched to RM20 billion at a EV/EBITDA multiple of 20x. Sunway share price has more than doubled up YTD to a market cap of RM24.5 billion today.

In comparison, IOIPG potential injection of IOI Central Boulevard into a REIT in Singapore may be even sooner than Sunway's setting up of the healthcare REIT. IOICB may be injected into a REIT as soon as in 2025 once occupancy reaches 90% or higher. Potential valuation may be as high as SGD6.0 billion or RM21 billion, even higher than Sunway's potential valuation of its healthcare REIT.

IOIPG has a market cap of RM11.9 billion only, trading at only half of the potential valuation of IOI Central Boulevard.

Post removed.Why?

@Jesse1314, I tend to agree with you.

Usually a listed company will be valued more if the boss or the investor relation officer is good in making contacts with the analysts and fund managers, answering questions of investors and making effort to address investors' concern.

We have seen the case of YTL and YTL Power where Tan Sri Francis Yeoh and his investor relation officer have been very busy meeting analysts, doing roadshows in Singapore and other countries, providing regular updates on the companies' developments such as the collaboration with Nvidia and issues around Wessex Waters, top bosses meeting local and foreign analysts like Hong Leong, Ambank, Macquarie, CLSA and JP Morgan, organising site visits to Kulai data centre park and Wessex Waters in Bath, UK, explaining the business models of PowerSeraya's competitive electricity market and Wessex Waters' regulated business model to analysts and giving ESOS at low share price to reward long serving employees (so that staffs will be incentivised to work harder to drive company's profits to higher levels).

Or in the case of AEON, at least its investor relation officer took the initiatives to contact me and address investors' concern. BPlant indeed got an offer from KLK as my earlier article suggested. IGBB is working on its plan to inject Mid Valley Southkey into the REIT to unlock value. Genting is mulling the plan for a US listing to unlock value of its various US assets, just waiting for the appropriate timing as suggested by its top management.

So far, we have not seen anything from IOIPG management to engage with analysts and the investment public. That's why it made me suspect that they might not want to maintain the listing status of the company and aim to privatise it at a low price.

In terms of PER, IOIPG is relatively cheap at 16x FY2024 earnings, compared to 32x for Sunway, 20x for MahSing, 23x for Sime Property and 38x for UEMS.

In terms of price to book, IOIPG is the lowest at 0.5x P/B, compared to 1.5x for Sunway, 1.3x for Mahsing, 1.0x for Sime Property, 0.8x for UEMS and 0.7x for SP Setia.

With such an undervalued stock and the largest property company in terms of profitability, it does not make any sense for foreign funds to continue selling IOIPG in such a big way, it is pure madness.

The culprit is obviously the proposed Shenton House proposal, which is seen as a related party transaction, typically disliked by foreign funds, just like years ago when IOI Corp proposed a related party transaction, its share price also tanked.

It is now down to IOIPG management to manage the public outcry arising from the RPT and management's inaction to assure investors to prevent further sellfdown of the shares.
I think it does not make any sense now to sell IOIPG shares, at such a depressed price level (already down 17% from recent peak), as any selldown will benefit IOIPG major shareholders if they are considering a privatisation. I would say we should hold onto the shares and go and vote down the Shenton House proposal in the EGM, if IOIPG management fails to provide assurance of the merits of the deal and fails to address investors' concern on its high gearing and related party transaction.

IOI Properties is set to unlock significant value from its Singapore assets, namely IOI Central Boulevard and Marina View Residences soon. On the Malaysia side, the group is also not resting on its laurels as it is scaling up its launches significantly capitalizing on the improving sector demand. The group is one of the largest landbank owners among developers in Malaysia, with more than 8k acres of land remaining and thus it is well-positioned to ride the current property upcycle. The stock remains grossly undervalued especially when considering that its property investment and hotel assets are worth more than twice its market capitalization, without even considering its landbank value yet. We anticipate that the stock will be the first pure play property stock to re-enter the KLCI by 2025 once market appreciates the value of the stock. We have a conviction BUY call on the stock with TP of RM3.30 based on 45% discount to estimated RNAV of RM6.00.

HL research today issues a report on the property sector. It opines that Malaysia property sector is in a multi-year upcycle from now on and the property companies with large landbank in strategic locations will do very well in next few years. The following is the extract from the report on IOIPG.

@raymondroy & MYOCBC, you can go to i3 messenger and look for my user name and add me to your chat list, then we can pm there

Foreign funds continued selling Gamuda (RM11 million sale value) and IJM (RM7 million) yesterday. They turned sellers of YTL Power as well at RM8 million yesterday. Foreign funds were not the main sellers of YTL shares yesterday but local institutional funds at RM12m yesterday.

But net buys from local institutional funds (RM12 million) and local retailers (RM12 million) in YTL Power were more than enough to offset the sell down by foreign funds, but these local funds and retailers tend to accumulate on weakness, and not pushing share price higher.

As statistics shows, foreign funds selling on YTL Power and YTL is abating as they have offloaded more than half of their earlier purchases in Jan-Mar 2024 with heavy selling of RM231m worth of YTLP shares in June 24 alone, and estimated selling of RM50m so far in July 24. Estimated holdings by foreign funds are estimated to have come down to RM430m for YTL Power and RM100m for YTL, which should be able to be adsorbed by local institutional funds for long term investment holdings once these hot foreign money decides to quit.

Foreign funds continued selling Gamuda (RM11 million sale value) and IJM (RM7 million) yesterday. They turned sellers of YTL Power as well at RM8 million yesterday.

But net buys from local institutional funds (RM12 million) and local retailers (RM12 million) were more than enough to offset the sell down by foreign funds, but these local funds and retailers tend to accumulate on weakness, and not pushing share price higher.

As statistics shows, foreign funds selling on YTL Power is abating as they have offloaded more than half of their earlier purchases in Jan-Mar 2024 with heavy selling of RM231m worth of YTLP shares in June 24 alone, and estimated selling of RM50m so far in July 24. Estimated holdings in YTL Power by foreign funds are estimated to have come down to RM430m, which should be able to be adsorbed by local institutional funds for long term investment holdings once these hot foreign money decides to quit.

@Jesse1314, I have similar bad feeling about it, but still believe IOIPG major shareholders will do the right things not jeopardizing minority shareholders' interests.

Post removed.Why?

oh ya. my posts in this forum got immediately removed. Not sure by who.

Not sure how to complain to i3, just let it be. I won't be bothered.

There seems to be rotational plays by foreign funds in blue chip counters.

After buying big on Gamuda in June 2024, foreign funds dumped some RM50 million worth of Gamuda shares last Thursday, followed by another RM16 million worth of selldown last Friday.

Foreign funds bought back RM16 million worth of YTL Power shares and RM13 million worth of YTL shares last Friday.

I am not sure why my posts in YTL Power forum have got removed by i3 admin, but my other posts in other forum remain there.

So the following post may be removed soon by i3 admin again, so if you need any more info on YTL Power, just pm me

My posts may be removed by i3 admin anytime soon, for reasons unknown to me.

So please pm me if you need such info.

There seems to be rotational plays in blue chip counters by foreign funds.

Having bought Gamuda and IJM in a big way in June 2024, foreign funds started selling Gamuda by dumping RM16 million worth of Gamuda shares last Friday and RM50 million worth of Gamuda shares last Thursday.

Foreign funds bought in a total of RM16 million worth of YTL Power shares and RM13 millon worth of YTL shares last Friday.

@Jesse1314, yes I have similar bad feeling about it, but I still think IOIPG major shareholders will do the right things and not jeopardize minority shareholders' interests.

And I think most of the employees will hold onto the shares after they exercise the ESOS, as they know the earnings prospects of YTL Power are bright and share price will scale new heights in next 1-2 years.

To me, the ESOS exercise was done in good faith as YTL Power top management issued ESOS when the share price was very low around RM0.60 last year or in 2022. ESOS is a way to reward employees and to encourage them to hold onto the shares to participate in the company's growth.

The employees of YTL Power deserve to be rewarded for their hardwork and dedication to work and loyalty to the company after serving the company for many years throughout the low periods during Covid-19.

I won't look too much into the ESOS as the quantity was not much compared to the total paid-up of over 8.2 billion shares.

With the inaction from IOIPG management to sooth investors' concern, it prompts me to suspect that there is a slim possibility that IOIPG major shareholders are using this related party proposal to force hands of foreign funds and short term funds to sell off their holdings in IOIPG to possibly below RM2.00, then they might launch a privatisation effort to take it private.

The merits of a privatisation are:
1) Low free floats of IOIPG - Lee family holds 65% in IOIPG, EPF holds about 7.3%, foreign funds have about 3-4%, other local funds may have another 5% or less, so free floats are less than 20%. So Lee family might need to fork out about RM2.00 x 20-30% x 5.5b = RM2.2-3.3 billion only to take it private

2) After they took it private, it would be easier to approve the related party proposal on Shenton House

3) IOIPG would be extremely cheap at a target privatisation price of RM2.00, at less than 0.5x book value of RM4.20 and prospective PER of 8x FY2025 earnings and 4.5x FY2026 earnings

4) IOIPG had net debt of about RM14 billion as of 30 June 2023. After IOIPG injects IOICB into a REIT in Singapore, it would take home SGD2.5-3.0 billion of cash. If IOIPG injects its shopping malls and office towers in Malaysia into a commercial REIT, it would take home another RM3.2 billion of cash. When its hotels are injected into another hospitality REIT, it would take home another RM1.3 billion of cash. By setting up the 3 REITs, IOIPG would take home a cool RM14.5 billion of cash, which would enable it to pare down most of the debts and become a net cash company. Not forgetting its vast landbank in Johor which is ready for quick monetisation, but it is holding onto any sale until after the privatisation.

Furthermore, with Biden withdrawing from US presidential race, Trump is seen as the likely winner. And he had said before that he would not want to see US Fed to cut interest rates before November presidential election.

Foreign funds are likely to take cautious view of the market and rate cut prospects in September. With the high gearing of IOIPG, many sectors are using this as an excuse to sell IOIPG shares, looking at the slimmer prospects of rate cuts in near term.

I have no feeling on the selling these few days as I am a long term investor.

But as I said, I won't promote this stock until I see positive actions from IOIPG management. Just like the case of AEON Bhd, I didn't bother with the stock until the then CFO resigned and there was a positive change in AEON top management.

@bullrun2025, the selldown is well expected as I explained last week. Foreign funds continued to offload IOIPG shares, with the latest selling of RM8m worth of IOIPG shares last Friday.

The bigger selling today may be due to yesterday news that Biden is pulling out from US presidential election race, and foreign funds are evaluating the potential impact of a Trump re-election.

But the underlying concern on IOIPG is still the lack of proactive actions or any response from IOIPG management to reassure investors of the merits of the Shenton House proposal, as foreign funds typically dislike related party transactions, they will sell IOIPG shares as they have not heard from IOIPG management for almost a month since the announcement of the SHenton House proposal.

Investment Highlights
We maintain BUY on YTL Power (YTLP) with an unchanged SOP-based fair value of RM6.25/share. Our fair value implies a FY25F PE of 15.6x. We also ascribe a neutral 3- star ESG rating to YTLP.
We believe that YTLP’s 100MW AI DC (data centre) in Johor is on track for commissioning in 2025F. We maintain our earnings forecast of more than RM1bil for the AI DC in FY26F. The AI DC would be using the GB200 Blackwell chips, which are expected to be out in the market by the end of this year.
According to Nvidia, GB200 provides up to a 30x performance increase compared to the same number of H100 GPUs. It also reduces cost and energy consumption up to 25x.
Sea Ltd took up 8MW under Phase 1 of the conventional DC in May 2024, out of the 32MW committed. We do not expect earnings contribution from this to be significant due to the small size.
Sea is anticipated to take up a capacity of 8MW every year until 2027F. YTLP would also be developing another DC in Johor with a capacity of 40MW.
We expect YTLP Seraya’s earnings to decline to RM3.2bil in FY25F from RM3.8bil in FY24E. We believe that operating profit margins would ease in FY25F as gas contracts renewed will be at higher costs.
Also, USEP (Uniformed Singapore Energy Prices) have fallen after surging during the Ukraine War in 2022. According to the EMA (Energy Market Authority of Singapore), average USEP was S$186/MWh in FYE6/24 vs. S$288/MWh in FYE6/23. YTLP Seraya recorded a pre-tax profit margin of 26.1% in 9MFY24 vs. 12.7% in 9MFY23.
We believe that Wessex Water would swing into the black in FY25F on the back of a lower interest expense. The division has been in the red since FY23 as interest expense on the inflation-linked bonds rose in line with higher inflation rate in the UK. Wessex Water registered a larger pre-tax loss of RM155.5mil in 9MFY24 vs. RM37.8mil in 9MFY23.
Although Ofwat (UK’s Water Services Regulation Authority) has proposed to reduce Wessex Water’s tariffs under the Draft Determination for PR24 (Price Review for 2025-2030), the decision is not cast in stone. Ofwat will review submissions by the water and sewerage companies and make a final decision on 19 December 2024.
Source: AmInvest Research - 19 Jul 2024

https://klse.i3investor.com/web/blog/detail/AmInvestResearch/2024-07-19-story-h-156191850-YTL_POWER_AI_Data_Centre_on_Track

An update report from AmResearch on YTL Power after a site visit to Kulai data centre park.

@Michaelchan2024, haha all three have big biscuits to chew on. Good stories will go on and on, to our success!

I will stop here and will only update when there is any new development.

Fellow investors you may just hold on if you have purchased it, otherwise I suggest you fall back to some technical chart guidance before you buy in more.