YTL Power’s (YTLP) FY13 core earnings of MYR1.07bn met  consensus estimates  but  were  slightly  above  ours  at  105.3%  of  our-full  year forecast,  mainly  due  to  better-than-expected  margins  at  its  Wessex Water operations.  No  dividend was  declared  for  the  quarter.  In  view  of the lack of near-term re-rating catalysts, we maintain our NEUTRAL call and tweak our FV slightly higher to MYR1.51 (from MYR1.50). 
 
- Ahead  of  expectations.  YTLP’s FY13  revenue  dipped  0.4%  y-o-y  to MYR15.82bn  as  the  higher  contributions  from  its  Wessex  Water operations  and WiMAX  division  were  more  than  offset  by  lower  income from its Malaysia and Singapore power operations. EBITDA fell 3.1% y-o-y  to  MYR2.98bn,  with  margins  dipping  530bps  to  18.9%,  dragged down by weaker profits at its power division. All in, its FY13 net profit fell 13.0% y-o-y to MYR1.07bn, in line with consensus but slightly ahead of our expectations, at 98.4% and 105.3% of  the respective estimates. On a quarterly basis, the 4QFY13 revenue of MYR3.89bn and core earnings of  MYR307.6m  were  generally  higher  q-o-q  but  weaker  y-o-y  due  to  a profit drop at the group’s power division.  

- No  dividend  declared.  To  our  disappointment,  the  company  did  not declare  any  dividend  for  the  quarter,  making  it  the  third  consecutive quarter without a dividend distribution. The group’s FY13 DPS of 0.9 sen pales in comparison to FY12’s 3.8 sen. That said, we do not discount the possibility  of  a  normalised  payout  for  FY14F  and  FY15F  as  we  expect annual  capex  from  the  WiMAX  division  to  come  in  lower  at  MYR300m (from MYR350-400m) moving forward. We are forecasting for DPS of 3.4 sen for FY14F and 3.8 sen for FY15F, which translate into annual yields of 2.2-2.5%.  

- Maintain NEUTRAL. We are updating our earnings model following the release of YTLP’s full-year  results  by  tweaking  higher  our  net  profit estimates by 2.1% for FY14F and 3.2% for FY15F. That said, given the lack  of  near-term  re-rating  catalysts  and  prolonged  pricing  pressure  at the group’s Power Seraya operation, we maintain our NEUTRAL call for now, with our SOP-based FV raised slightly higher to MYR1.51 to reflect our earnings revision.

Source: RHB