YTL Power ready to buy

PETALING JAYA: YTL Power Bhd has turned net cash as a result of the sale of its 33.5% stake in Australian-based power transmission firm ElectraNet Pty Ltd and is now positioned to pursue new projects or acquisitions.

Maybank Investment Bank’s Research arm said this in a report adding that the completion of the ElectraNet disposal had boosted YTL Power’s coffers by around RM3bil.

“At the investment holding level with the disposal proceeds, we estimate YTL Power’s gross cash at circa RM10.5bil, and net cash at RM1.9bil at the end of the financial year ending June 30, 2022 (FY22).

“It is now well-equipped to pursue new capital expenditure-intensive projects or acquisitions for future accretion,” it told clients in the report yesterday.

It pointed out that the market however, appears to be dismissing YTL Power’s cash factor.

“At the current share price, investors are effectively dismissing the investment holding net cash (23 sen per share) and the associated potential future accretion.”

It has reiterated a “buy” call on YTL Power with a higher 90 sen target price and said it believed YTL Power can comfortably sustain a five sen annual dividend per share in the coming years.

“We raise our FY22, FY23 and FY24 net profit forecasts by 17%, 5% and 0.4% respectively, to reflect updated financial performance. Our target price is raised to 90 sen from 67 sen as we also incorporate the ElectraNet proceeds,” said the research house.

One of YTL Power’s main assets is the United Kingdom’s Wessex Water Services Ltd, which possesses a regulatory asset base of £3.36bil (RM19bil).

The company is also a controlling shareholder of the YES 5G mobile network.

The company has fallen off the radar of investors since 2017, according to analysts who track it, largely due to falling profits and low dividends.

YTL Power posted a net loss of RM146.5mil in FY21 compared with a net profit of RM67.63mil a year earlier. Revenue meanwhile was marginally higher at RM10.78bil versus RM10.63bil in FY20.

The net loss was mainly due to to deferred tax expenses as a result of the increase in UK’s corporate tax from 19% to 25%. At last look YTL Power’s shares were at 68 sen apiece, valuing the entire company at some RM5.5bil.