KUALA LUMPUR: YTL Power International Bhd
's 1Q19 results were disappointing due to PowerSEraya recording its first losses since it was acquired nearly a decade ago.
Kenanga Research said YTL Power's 1Q19 results missed expectations with core profit pliunging 38% sequentially to RM130.9mil as PowerSeraya chalked up losses due to a lower vesting contract level, lower retail non-fuel and tank leasing margin.
However, the research house said YES reported much lower pre-tax loss of RM8.3mil, the lowest losses in two years, against RM25.6mil in 4Q18, due to lower operating cost.
The PPA Extension Contract and Paka Power Plant also helped to boost earnings from 1Q18, with core earnings rising 4% year-on-year from RM126.3mil with revenue growing 9% y-o-y.
Kenanga says earnings prospects will remain challenging in the immediate term before the two new greenfield projects - the PT Tanjung Jati coal-fired power plant in Indonesia and Attarat Power's oil share-fired power plant in Jordan - come on-stream in three to four years.
"For existing businesses, outlook for PowerSeraya remains challenging as the electricity market in Singapore remains competitive with generation capacity oversupply in the wholesale electricity market.
"Meanwhile, for Wessex Water, earnings are expected to be fairly flattish in GBP terms while YES will continue to be loss-making in the near term."
Kenanga maintained its market perform rating on the coutner with a lower target price of RM1.05 from RM1.10 previously.
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