Posted by dragon328 > 2022-10-03 15:14 | Report Abuse

The Niseko landbank of YTL is worth USD2.0 billion or RM9.3 billion at today's value, which is already larger than YTL Corp's market capitalisation of RM6.1 billion. This means we are getting all other assets like YTLPower, MCement, YTL Hosp REIT, Starhill Global REIT, Sentul landbank, construction arm for free.

Posted by dragon328 > 2022-10-03 15:16 | Report Abuse

In 15-18 years time, this Niseko landbank would be worth close to USD5.0 billion if YTL keeps it without developing it. That would be almost RM23 billion or RM2.11 per share. Monetising it then would make YTL stock a 4-bagger.

Posted by dragon328 > 2022-10-03 15:22 | Report Abuse

If YTL chooses to develop the Niseko land at sustainable pace and keep 20%-30% of the resort homes, total recurring income from the hotels, resorts and serviced suites there may top RM1.8 billion a year. Minus off Japan tax rate of 45%, net income still top RM1.0 billion a year or 9.0 sen per share. At 6% dividend yield, this dividend stream from Niseko would enable YTL share to trade up to RM1.50.

Posted by dragon328 > 2022-10-03 15:24 | Report Abuse

If YTL lists up these assets at Niseko as a REIT in Japan, this Niseko REIT would be worth RM37 billion at 5% yield. That would make YTL stock a 6-bagger straightaway.

Posted by wps123 > 2022-10-04 17:34 | Report Abuse

Very interesting projection over the next 15 years? With YTL RM57 Billion debts with meagre net profits of merely RM500 Million? The burning question, would the company still be around in 15 years time? Any opinion?

Posted by dragon328 > 2022-10-04 21:01 | Report Abuse

@wps123, first of all, lets get the fact right. Based on YTL quarterly report as of 30 June 2022, total debts amounted to RM42.2 billion with total cash of RM11.3 billion and short term investment of RM1.5 billion. So net debt amounted to RM29.4 billion.

Posted by dragon328 > 2022-10-04 21:06 | Report Abuse

True that net profit for FY2022 only totalled RM530 million, but it is already a big turnaround from RM368 million loss in FY2021. The loss was due to COVID-19 pandemic when most hotels and resorts hit zero or low occupancy and shopping malls had low footfalls. Furthermore, there has been no big infrastructure projects in past few years, which has slowed YTL's construction profits and cement demand.
However, things are looking bright after the pandemic with crowds flocking back to YTL shopping malls & restaurants, and YTL hotels getting occupancy rates close to pre-pandemic levels.

Posted by dragon328 > 2022-10-04 21:13 | Report Abuse

You also need to look at YTL's operating cashflows (before capex and working capital changes) which are strong: RM1,641 million in FY2022 and RM1,593 million in FY2021. Operating cashflows before debt service amounted to about RM3.5 billion in FY2022 & FY2021, providing a interest cover ratio of 2.9x which is way above norms.

Posted by dragon328 > 2022-10-04 21:20 | Report Abuse

With total assets in excess of RM72 billion and positive operating cashflows of over RM1.5 billion a year, what makes you think that YTL cannot survive?
A simple analogy - if a person buys a freehold property for RM720,000 and borrows RM294,000 from banks. He has annual income of RM35,000 and needs to pay bank instalments of RM12,500 every year. If the freehold property continues to appreciate in value and his income gradually increases over year, will he go bankrupt?

Posted by dragon328 > 2022-10-04 21:27 | Report Abuse

The total amount of debts is itself not scary, but if a company does not have positive operating cashflows to service the debt, then even if its total debt is small, the company will still go bankrupt even though on paper it reports high accounting profit (like Serba Dinamik).

You should not be too worried of taking debts, otherwise you will have to pay all cash to buy a house.
But for a company, the cost of equity is always higher than the cost of debt, so it is more capital efficient to gear up when the company acquires an asset. The key thing is that the asset being acquired must yield returns higher than the cost of debt.

Posted by dragon328 > 2022-12-22 19:01 | Report Abuse

I would make a small correction to my calculation earlier in the article:

For 1.5 million visitors a year to Niseko, it will need 12,500 rooms to accommodate them at 33% occupancy if each stays for only 1 night. If average stay is 2 nights, then it will need 25,000 rooms at 33% occupancy, and average stay is 3 nights, then it will need 37,500 rooms for these 1.5 million visitors at 33% occupancy.