Stock Name: YTLPOWR
Company Name: YTL POWER INTERNATIONAL BHD
Research House: CREDIT SUISSE

KUALA LUMPUR: Credit Suisse Securities Research is maintaining its Underperform on YTL Power International on concerns about its investments in projects which are not widely adopted.

It said on Wednesday, Dec 15, YTL Power is fairly valued, as it is trading at a FY11E price-to-earnings (PE) of 15 times, which is in line with the Malaysian market P/E.'' It maintained its Underperform rating.

On Tuesday,'' YTL Power said it was investing in oil shale in Jordan with the acquisition of a 30% stake in Enefit's Jordanian oil shale projects, marking its foray into the upstream oil business.

The consortium plans to develop an oil plant with output of approximately 38,000 barrels per day and a 900 megawatt oil shale-fired power plant. As oil shale extraction is not widely adopted yet, the output figure may be contentious.

'Main concerns with oil shale: (1) cost has been significantly higher than conventional pumped oil (2) environmental concerns.

'As oil shale is still largely 'conceptual', we would not incorporate any profit contribution from this project yet. The risk profile of YTL Power continues to increase as it is investing in projects that are not widely adopted, that is Wimax and oil shale,' it said.

It rose one sen to RM2.42 at midday on Wednesday.