YTLP reported core PATMI of RM244.0m for 4QFY22 (+581.0% QoQ, +1095.4% YoY) and RM406.1m for FY22 (+1.6% YoY). We deem the result above HLIB FY22 forecast (152.6%) and consensus (188.0%), mainly driven by the strong contribution of Singapore Seraya Power. Declared a second interim dividend of 2.5 sen/share. We remain positive on YTLP’s earnings outlook and attractive dividend yield. Maintain BUY with unchanged TP: RM1.05 based on 10% discount to SOP: RM1.16.

Above expectations. Reported core PATMI of RM244.0m for 4QFY22 (+581.0% QoQ, +1095.4% YoY) and RM406.1m for FY22 (+1.6% YoY). We deem the results above HLIB FY22 expectation (152.6%) and consensus (188.0%), mainly driven by higher contributions of Singapore Seraya Power. YTD EIs of +RM851.5m were mainly due to RM1.3bn disposal gain recognised for Electranet and RM41.3m forex gain, which were partially offset by impairments for inventories, intangibles, project development costs and receivables and fair value loss on investments.

Dividend. Declared a second interim dividend of 2.5 sen/share (ex-date: 10 Nov 2022). Total dividend for FY22 would be 4.5 sen/share (6.3% yield).

QoQ/YoY. Core PATMI improved by +581.0% QoQ and 1095.4% YoY to RM244.0m, mainly driven by improvements in Singapore Seraya Power operation (on higher retail margin and new contribution from Tuaspring), but partially offset by weaker UK Wessex Water (on higher inflationary cost structure and finance costs).

YTD. Core PATMI was flattish +1.6% to RM406.1m, as the higher contribution from Singapore Seraya Power (on higher pool gains and retail margin) was offset by the lower contribution of UK Wessex Water (on higher operating cost structure and finance costs), expiry of Malaysia Paka Power and lower associate contribution.

Outlook. Post acquisition completion of Tuaspring on 1 June 2022, Singapore Seraya Power is expected to leverage on the new asset to expand its market share and improve its overall margins. However, UK Wessex Water is expected to face continued inflationary pressure despite having approved higher tariff in April 2022. The group is also venturing into Green Data Centre business supported by its planned development of 500MW LSS in Kulai. Furthermore, the group will also leverage onto the newly awarded digital banking license (Sea Limited-YTLP consortium).

Forecast. Unchanged.

Maintain BUY, TP: RM1.05. We uphold our BUY recommendation, with unchanged TP: RM1.05, based on 10% discount to SOP: RM1.16 as we believe the current valuation is relatively undemanding, while dividend yield may surprise on the upside.

Source: Hong Leong Investment Bank Research - 26 Aug 2022