YTL Power; Hold; RM1.88
Price Target: RM1.70; YTLP MK

The Star reported that YTL Group is eyeing Ranhill Energy and Resources Bhd’s water treatment plants in Johor. Ranhill has an exclusive licence to supply source-to-tap water to end-customers in Johor. The current licence is valid till 2014 and renewable every three years. As for the power sector, YTL is said to be eyeing new assets in Johor.

The acquisition, if any, is in line with YTLP’s plan as the group has been conserving cash to gear up for new acquisition to compensate for the lower Malaysian earnings after the expiry of its PPAs in 2015. New acquisition is also crucial to sustain the group’s longer term growth given the more challenging outlook for PowerSeraya in Singapore due to increase in generation capacity. We believe the new acquisition will be mostly debt funded and the equity portion will be financed by the group’s RM10bn cash hoard at end Jun13. Maintain HOLD with DCF-derived TP of RM1.70.

Source: HwangDBS Research - 30 Oct 2013