YTL Power to stick to investing in regulated assets

Fundamentally, Maybank IB Research considered YTL Power’s current risk-reward profile as being merely balanced.

PETALING JAYA: YTL Power International Bhd (YTL Power) is unlikely to diversify aggressively into renewable energy due to the lean returns from such projects, according to Maybank Investment Bank Research (MaybankIB).

The research house noted the utility conglomerate’s willingness to participate in greenfield coal-fired plants suggests its environmental, social and governance (ESG) concern.

“Given YTL Power’s considerable coal exposure, the company will have to contend with the environmental stigma for the considerable future.

“Being family-controlled, the group can maintain its returns-oriented focus even in the face of ESG scrutiny, ” MaybankIB said yesterday.

“We thus expect the group to maintain its current strategy of investing in regulated assets with long-term concessions and attractive returns for the foreseeable future. Aggressive renewable diversification appears unlikely in our view given lean project returns in the space, ” it said.

Fundamentally, it considered YTL Power’s current risk-reward profile as being merely balanced.

It maintained “hold” on the counter, with an unchanged target price of 67 sen.

YTL Power’s coal exposure came through its 20% effective stake in Jawa Power, a coal-fired power plant in Indonesia with a power-purchase agreement expiring in 2030. Despite being only an associate, Jawa Power is YTL Power’s second-biggest net-profit contributor.

On the governance metrics, MaybankIB noted that despite YTL Power being family-controlled, there had not been any questionable related-party transaction undertaken by YTL Power.

The research house pointed out that while YTL Power did not have a set dividend policy, the company had been proactive with capital management, having paid out relatively generous cash or stock dividends every year.

The company was also active in share buybacks, it noted.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3

YTL Power , regulated assets , MaybankIB ,


Did you find this article insightful?


100% readers found this article insightful

Next In Business News

CPO futures trading to remain range bound next week
Advisory panel unanimously recommends FDA authorize Johnson & Johnson COVID-19 vaccine
GameStop rally fizzles; shares still register 151% weekly gain
NYSE begins move to delist Chinese state oil producer CNOOC
Oil price drops on US$ strength and OPEC+ supply expectations
GLOBAL MARKETS-Globals stock slide on inflation fears
AMMB says it has enough capital to absorb 1MDB global settlement�
A five-year high for FGV Holdings
AMMB to pay RM2.83bil to the government
IHH to take proactive measures

Stories You'll Enjoy