Journey to Wealth
YTL Power International - 4Q12 within expectations
Period 4Q12 / FY12
Actual vs. Expectations
FY12 net profit of RM1.23b met expectations, making up 98% of the street's FY12E net profit of RM1.25b and 96% of our RM1.28b.
Dividends 4Q12 tax exempt dividend of 0.9375 sen declared. Hence, the total FY12 NDPS of 4.69 sen (-50% YoY; 2.6% yield) was below our FY12E NDPS of 6.00 sen and the street's 6.30 sen.
Key Results Highlights
YoY, FY12 earnings slid by 2%. Seraya's PBT dipped by 32% due to lower sales volumes and depreciation of SGD vs. MYR by 1.8%. Wessex's PBT declined by 6% on higher related financing cost and depreciation of GBP vs. MYR by 2.6%. YES also chalked up a higher start-up pretax loss of RM310m (-11% YoY).
QoQ, 4Q12 pretax profit decreased by 5% to RM333m, mainly because its Malaysian IPP was hit by a higher depreciation charge of RM105m, causing the segment's PBT to decline 45% (continue overleaf).
Outlook YES should continue narrowing its start-up losses assuming there will be the reported (The Edge) Bestarinet contract (RM300m p.a.). We expect YES to fully break even by FY14E.
Meanwhile, the government's decision on Track 1 new capacity (Prai: 1000-1400MW) and Track 2 (1st Gen PPA extension on lower rates) will be in Oct-12 and we believe YTLPOWR has a good chance given its cost of fund advantage. We do not discount the possibility of the sale of its Malaysian IPP business either, as seen with 1MDB's acquisitions.
Change to Forecasts
We are reducing FY13-14E net profits by 4%-3% to RM1.27b-RM1.31b on lower Seraya's volume sold. The key drivers continue to be Wessex, Seraya and Malaysian IPPs. We also estimate a slightly higher FY13-14E NDPS of 6.3 sen each (3.5% yield) (refer overleaf).
Rating Maintain MARKET PERFORM
Although the stock is trading at unappealing dividend yields, it is already near, if not at, its trough valuations - FY13E PBV of 1.3x and FY13E PER of 10x.
Valuation Raising our TP to RM1.80 (from RM1.71) as we roll over our valuations to FY13E while using an unchanged target net yield of 3.5%*.
Risks Lower FY13E dividends. Global economic risks, especially Europe.
Source: Kenanga
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
