YTL Power's shares up on proposed acquisition of stake in Ranhill Utilities

KUALA LUMPUR: YTL Power International Bhd's (YTLPI) shares rose this morning following reports that its indirect 70 per cent-owned unit, SIPP Power Sdn Bhd has proposed to acquire about 31.42 per cent stake in Ranhill Utilities Bhd for RM405.18 million.

At 10.17 am, its shares gained 12 sen to RM5.12, with 6.79 million shares traded.

In a filing with Bura Malaysia yesterday, YTLPI said SIPP Power has entered into an unconditional share purchase agreement with Tan Sri Hamdan Mohamad, Hamdan Inc (Labuan) Pte Ltd and Hamdan (L) Foundation for the proposed acquisition.

Upon completion, SIPP Power’s direct shareholding in Ranhill will increase to about 34.32 per cent from 2.90 per cent, subsequently triggering an unconditional mandatory takeover offer (MTO) to acquire all the remaining shares in the water supply services provider.

RHB Research believes that the proposed acquisition was a strategic move as it complements YTLPI’s portfolio while strengthening its footprint in Johor, in tandem with its ambitious data centre development.

"Near-term impact is likely to be muted, but we see potential synergies in the longer run,” it said.

Meanwhile, Kenanga Investment Bank Bhd sees Ranhill's water utility in Johor, independent power producers in Sabah, and large-scale solar projects in Perak as good fits for YTLPI, although their impact on the group’s earnings is minimal.

The research house continues to like YTLPI for its earnings stability, backed by its various regulated assets globally; the strong near-term earnings prospects of PowerSeraya supported by gas inventory locked in at low prices; and its longer-term growth potential driven by its data centre and digital banking ventures.

Subsequently, RHB Research has maintained its ‘buy’ call for YTLPI’s shares, with a target price (TP) of RM6.68 per share, while Kenanga Investment also maintained its ‘outperform’ rating (TP RM5.22) for the company.

At 10.17 am, Ranhill Utilities’ shares slid by four sen to RM1.31, with 10.97 million shares traded. - Bernama

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