If you are not expert on AI data centre, do not simply put up sabotage statements.

I am not expert on this area, so I have not written much about it. But some analysts have become more bullish than us on this new business area, forecasting that this segment may contribute RM1.2 billion of net profit to YTLP every year from 2026.

@ks55, I am afraid you are wrong in your statements above.

Nvidia derives about 80% of its revenue from AI data centre business, the same it is in collaboration with YTLP to develop in Kulai.

Nvidia will be co-investing in this new AI data centre, it is malicious to say that YTLP will have to come out with all the capital. Irresponsible statement.

WOW PBA powerful rally.

Finally consolidation is over and the market has realised how undervalued this counter is

Expect new waves of foreign buying on YTL and YTL Power after 29 Feb when both counters are officially included in the MSCI index

@Agjl, yes indeed finally the market appreciates the potential of MCement, as I have long been advocating for its dominant market share in Peninsular and softening coal prices

YTL Corp earnings surprised on the upside, with better than expected earnings from cement and hotels divisons.

But YTL Power earnings also beat most analysts' expectation, with continued strong earnings from PowerSeraya, plus a wild card in its AI data centre business which some analysts forecast may contribute net profit of RM1.2 billion a year to YTLP from 2026

Indeed, YTL Corp's results surprised on the upside, with better than expected earnings from cement and hotels divisions.

But YTL Power earnings are also better than most analysts' expectation, with continued strong earnings from PowerSeraya plus the wild card in AI data centre business. Some analysts forecase net profit contribution of up to RM1.2 billion a year from data centres to YTLP every year from 2026

Post removed.Why?

Hong Leong sum-of-parts valuation is RM6.16 for YTLP

Post removed.Why?

@2721, yes Wessex financials are a little hard to understand, especially the provisions for index-linked bonds. It is difficult to have a good forecast for each quarter to come.

But these provisions are non cash in nature, so it does not affect the current cashflows, but have an impact on accounting profits.

I suggest we just focus more on its operating profits which will soon turn around after it secures another round of water tariff hike for financial year starting from 1 April 2024 to 31 Mar 2025.

The provisions for index-linked bonds are linked to some inflation index in the UK, so as inflation cools off in the UK in coming quarters, I expect such provisions for ILBs will gradually come down.

Agjl, MCement as you can see reported substantially higher earnings for Q2. I expect full year EPS to hit 35 sen, if we apply a fair PER of 15x for its dominant market share of cement in Malaysia, it should be worth RM5.25

MCement 1H FY2024 operating cashflows (before working capital changes and capex) were very strong at RM456 million, annualised to RM900 million as I forecast before. Capex for 1H was about RM100m, so full year free cashflows may top RM700 million or 53 sen per share. At free cashflow yield of 7%, MCement may be worth RM7.63 per share.

YTL REIT and YTL broadly delivered better than expected results for Q2

https://klse.i3investor.com/web/blog/detail/dragon328/2024-02-22-story-h-188247094-YTL_YTL_Power_Ended_Year_2023_with_a_Bang

Mcement delivered better than expected results for Q2

https://klse.i3investor.com/web/blog/detail/dragon328/2024-02-22-story-h-188247094-YTL_YTL_Power_Ended_Year_2023_with_a_Bang

YTL delivered better than expected results for Q2

https://klse.i3investor.com/web/blog/detail/dragon328/2024-02-22-story-h-188247094-YTL_YTL_Power_Ended_Year_2023_with_a_Bang

As projected, YTL Power delivered another set of excellent results for Q2. My analysis is as follow.

https://klse.i3investor.com/web/blog/detail/dragon328/2024-02-22-story-h-188247094-YTL_YTL_Power_Ended_Year_2023_with_a_Bang

hello, INdonesia has got 270 million population, if you divide the GDP by the population, Indonesia GDP per capital is only USD4,800, while Malaysia is already more than USD11,000 per capital

Keep lobbying for AA and enriching low cost airlines can make us a high income nation??

So narrow minded

If what he said made any sense, he won't be sidelined. Total nonsense to me.

I don't agree with the argument that the interest payments for the HSR project would be more than buying air tickets for every KL people to travel to Singapore, this was obviously speaking for the airline industry.

First, the project costs will be mainly borne by the private consortium, not the government. The government will likely only look into land acquisition, the rest of the project costs will be financed by private consortium with cheap money from China or Japan. Hence there is no issue arising for our government to carry huge amount of debts and pay high interests. So the statement itself is false.

Secondly, air tickets may not come cheap when you need them. Very often than not, an air ticket may cost you a bomb when you need to book one to Singapore or back, especially during festive seasons or important events or on emergency. Furthermore if you look into the statistics, how many travellers who take flights between KL and Singapore are leisure travellers? I think the bulk of them are on business or lone travellers. It costs over RM1000 for a family of four to fly from KL to Singapore or vice verse, and takes over 3 hours on total travelling time, including the 2-hour pre-flight check in time. It only costs RM70-100 for a family to drive from KL to JB.

Thirdly, the argument that the government would rather save the money on HSR and channel it to other facilities to the people like hospitals or schools is again false, as the government is not funding the HSR projects. Instead, when the HSR takes off, it will encourage more economic activities, more tourists from Singapore, more expats to stay in KL, more multi-national corporations to set up regional HQ in KL, help to increase property prices in the Kland Valley and areas surrouding HSR stations, promote more inter-state tourism activities especially to states with HSR stops etc. All these will add more tax income to the government, and the multiplying effect from such will be a lot more than the interest payment for the HSR project.

LRT and MRT projects in the Klang Valley are not viable, but these are essential infrastructure that the government ought to provide to the people.

You try to terminate MRT lines and see, millions of people will suffer. Public roads in KL will be even more jam packed.

This looks like a propaganda by Japanese consortium who have pulled out from the HSR race to blackmail the project. They think that the project will not be feasible without government funding, and they could not get any from the government so they pulled out of the bid.

It may be that their proposal is not good enough to make it feasible, their cost may be double of that from Chinese maker, and they may not be innovative enough in terms of revenue models.

I see HSR is the way to go for us to fast-track our race to become a high-income nation, and I do not think that we need to be a high income nation before we can consider HSR. Indonesia has already made a HSR line up and running, Thailand is already considering HSR as well.

There are merits in the HSR proposal. For one, the multiplying effects from the construction contracts may allow over RM100 billion of economic benefits to flow through the various supply chains for the project - construction materials, construction workers and labour force, various supporting industrial and workshops, property development around each HSR station, thousands of job creation during construction period and operational phase, tourism spill-over to areas along the HSR track etc.

HSR would provide a vital option for travellers between KL and Singapore, now only relying on inefficient air flights often packed and expensive during peak seasons. The amount of time saved during the journey is vital for business travellers. Just imagine, business travellers can do a day trip between KL and Singapore by taking a 90 min train from KL to Singapore, having meetings in Singapore and then commute back to KL in 90 mins to have dinner at home. And along the HSR journey, business travellers can have precious time to sit comfortably in the train doing some reading and preparation for meetings ahead. 1 hour of business hours saved in travelling for a million passengers will be a million hours of manhours saved for more productive work, rather than on wasteful travelling and waiting.

Singapore property prices are at least 7 times higher than that in KL. With the HSR, many expats can choose to stay in KL to enjoy the much lower rental and commute by HSR to Singapore for work (if there is affordable monthly tickets available). There will be more demand from expats and Singaporeans for good quality properties in the Klang Valley, this will help to fill the big gap in property prices between KL and Singapore. Many existing property owners in the Klang Valley will see their property prices appreciating substantially.

For leisure travellers, HSR will be a good option if they travel alone or just in small groups (2-3 pax) especially during festive seasons like CNY. We are seeing more and more cars on the road in North-South highway, and it could take up to 8 hours to drive from JB to KL on days before CNY or Hari Raya. Rather than spending endless hours on the highway, many may be willing to spend a few hundred ringgit on HSR just once or twice a year to have a comfortable 90 min ride.

We would be losing out to our neighbours in ASEAN if we still didn;t do the HSR. We were the first to propose HSR project some 10-15 years ago when the proposed cost was just less than RM15 billion for the 350km KL-Singapore HSR, then there were many critics too to try to kill off the project, many from the airlines and bus industry. Now the same groups of people are coming out to shout and doubt on the feasibility of the HSR, trying to kill it off again.

But I always believe in the end common sense prevails, considering the huge value this HSR project will bring to the country.

Be careful. HSR by private sector may be not feasible.
https://www.sinchew.com.my/?p=5405022

@cgtan2020, as pmed you, Sembcorp's 2H Gas profit was lower by SGD61m than 1H Gas Profit. I think it is primarily due to two reasons: 1) The pool prices in 2H were generally lower without much spike after TPC was implemented from 1st July 2023, so Sembcorp could not benefit from long generation into the pool, which gave it almost SGD30 million of extra profit per quarter in the 1H 2023, 2) Sembcorp has gradually increased its exposure to longer term (10-18 years) power purchase contracts with large industrial customers, which typically fetch slightly lower gross margin compared to smaller retails contracts that last for 6 months to 24 months.

@cgtan2020, I don't have enough info to make a meaningful comparison of Sembcorp's 1H and 2H results.

The headlines say its 2023 2H earnings were 15% higher than 2022 2H, and I do not know if its 2023 2H earnings were higher or lower than 2023 1H earnings.

May need to wait for its corporate presentation slides or analysts' briefing notes to come out then only can get more info.

Anyway, Sembcorp or Keppel has a lot more other assets like renewable energy assets overseas and Keppel has sizable property division and data centre REIT, so the results may not reflect entirely on PowerSeraya's performance. We need to only focus on their Singapore power business.

Both companies are optimistic of their Singapore power business division for next 2-3 years, that's what I was looking for.

Sembcorp's strong results speak well of PowerSeraya's prospects.

https://www.reuters.com/business/energy/singapores-sembcorp-industries-full-year-profit-jumps-2024-02-20/

Berjaya's proposal offers nothing better. They just propose setting up MLFF at less toll roads so the cost can be lowered by 30%. Furthermore, it proposes for the MLFF infra to be built by each highway concessionaires so that Berjaya will not need to come out with capital. It just wants to be a toll collecting agent and earn a commission.

Posted by xiaochen > 38 minutes ago | Report Abuse

@Paul Tan
The possibility is there. Thanks for giving hint.

Berjaya to challenge YTL for MLFF highway toll project?
https://soyacincau.com/2024/02/19/berjaya-challenge-ytl-mlff-highway-toll-project/

Profit taking in a long rally is normal. I see quite many people took profit on YTLP around RM4.00-4.20 as that was their first target after getting 200%-300% profit. I have nothing to comment on the profit taking as it is entirely normal for investors to lock in handsome profit. The current share price weakness seems to be a good chance for these people to buy back.

Irrespective of the share price fluctuations, I always fall back to fundamentals. As long as the earnings continue to grow, share price appreciation will follow. Simple as that. Let the numbers in the upcoming quarterly results speak for the company prospects.

I see good chances for us who got it low around RM0.70 to get 7 bags pretty soon, before we look at a 10-bagger.

I see a

British inflation held flat at 4.0% for Jan 2024, which is a good sign for Wessex to turn around sooner.

@Goldberg, this is excellent news for YTL to start the new year of the dragon!

More foreign funds will buy into YTL which is a laggard in the recent construction and property plays rally.

I have explained several times on the debt situation at YTL Power, most of the debts are ring-fenced at the various assets level. The holding company level in fact has a net cash position.

If some parties do not understand the meaning of debt ring fencing, we need not argue with them. Foreign funds do understand.

AS Mabel calculated, YTL Power gearing is at about 58%, which is typical of any utility company. FYI, Wessex Waters has a gearing of 65% to 70% which is a norm for all other water companies in the UK. That's perceived to be a well geared and capital efficient structure by foreign funds and UK regulator.

@investopology, this is excellent news!!

More foreign funds will buy into YTL & YTL Power after the inclusion into MSCI index which is widely followed by foreign funds.

Happy CNY to all!

Happy CNY to all!

Have a good break to recharge before welcoming a prosperous year of the dragon!

Good closing before CNY.

I wish all of you a very good holiday break followed by a prosperous year of the dragon.

AffinHwang research analyst this morning issued an update report on Tenaga and revealed that Tenaga's 1,010MW coal-fired power plant in Manjung 4 has been offline since early December 2023 due to severe fractures in the intermediate pressure steam turbine. The plant is expected to be down until late 2024. Tenaga earnings in 2024 will be affected, as a result AffinHwang reduces its earnings projection for Tenaga by 7% to RM4.0 billion for Dec FY2024.

However, Affin raises the target price for Tenaga to RM12.00 by adjusting lower the WACC to 6.5% from 6.8% in its DCF valuation.

See this is how analysts try to support GLC stocks by using "innovative" valuation method. To me this is not a bad thing, it will only help to justify a higher valuation for YTL Power.

At its tp of RM12.00, Tenaga will have a market cap of RM69.5 billion or at a forward PER of 17.4x.

In comparison, YTL Power's net profit for June FY2025 may top RM4.0 billion on par with Tenaga's FY2024 earnings, but its market cap is not only half of Tenaga's. How would one justify this??

Having said that, I think it is still likely for YTLP to hit your target price of RM5.88 in next few months:

FY2025 EPS of 49 sen x forward PER of 12x = RM5.88.

I am confident that the market will eventually accord a higher PER to YTL Power after it is convinced that PowerSeraya earnings can sustain forward. After all, Tenaga is trading at 20x FY2023 PER and may be over 20x forward PER on FY2024 earnings as its Manjung power plant gets hit by a major overhaul downtime to end of this year.

@darrenliew, I am afraid that I may have to tamper your expectation a little bit. I think EPS of 15.47 or net profit of RM1,253 million for this Dec 2023 quarter and for next 2 quarters may be a little stretched. I would be happy if it can just top Q1 FY2024 net profit of RM850 million, but will not discount the possibility for it to top RM1.0 billion each quarter.

As projected earlier, I think it is more likely for YTLP net profit to hit above RM1.0 billion mark from FY2025, if lucky it may hit RM1.1 billion a quarter. I think we may need to wait till FY2026 before quarterly net profit can hit the RM1.25 million mark, when the AI data centre division gains more tractions.

https://www.nst.com.my/property/2024/02/1011075/ytl-lands-upscale-residential-project-epf-owned-kwasa-damansara-nearly-sold

This is another area of enormous growth for YTL

https://theedgemalaysia.com/node/700229

YTL is scooping up quality assets at bargain prices. Its various business divisions are expanding and growing fast after the pandemic - utilities, cement, hotels, property and construction

Share price is playing catch up with YTL Power.

@dollardollarbill, thanks for the news link. This is a timely announcement from PBA.

Despite the recent tariff hike, the water tariff of Penang remains as one of the lowest in Malaysia. This paves the way for more hikes 3 years later.

@Raymond Tiruchelvam, we should not be too concerned with foreign exchange rate movements, more important is the underlying business core earnings. If PowerSeraya earnings continue to be strong, even if ringgit strengthens to RM3.00 to SGD, the profit contribution from PowerSeraya to YTL Power will be lowered by 15% accounting wise.

But cash is cash, YTLP may choose to have the cash parked in Singapore when the ringgit is too strong and the company does not require the cash, and only repatriate the cash back when SGD is strong. Or it can choose to utilise the cash for future projects in Singapore or in the region.

The company business is a long term asset and any FX fluctuation should not affect the company operations and earnings, it only affects the accounting profit calculations.

If you think the current rate of SGD1.00 = RM3.55 is high, think again. Those Malaysians working in Singapore rushed to change their Sing dollars into ringgit when the FX rate touched RM3.30 all time high few months ago, now they are wondering if they should sell off their Sing dollars in hand.

Now YTL Power shares are hot but valuation is still cheap at less than 10x PER. And there are still many good news and developments coming in next few months. Even when it hits RM5.00, the PER will be just 11x (based on Hong Leong projected earnings for FY2025).

@Agjl, my suggestion is that you do review your investment goals and options as the share price goes up, as we do not know when it will touch RM5.00 or if at all.

If another better investment option appears, then it will make your decision easier and you just switch over even if the share price has not reached RM5.00.

If there is no better option, then you just hold on until the share price has gone up so much that it has become over-valued to you and on normal valuation methods, eg. PER becomes higher than 25x.

I think this way is easier, and you don't need to think too much now and can have a good sleep.

When it becomes too over-valued, there will be signs you can notice easily, just like the gloves stocks that hit RM30 in 2021 when the pandemic was coming to an end and you knew that glove companies' earnings would drop drastically to cause the stocks' PER over 30x.

But there was still analyst that gave sky high target price up to RM100, and people from all walks of life without any investment knowledge just jumped into the bandwagon. That was the time to get out when such euphoria happened.

@Agjl, I do not have a definite answer right now. If YTL Power share price hits RM5.00, most likely I will still hold on as my long term target is much higher than this.

As my entry cost is low at below RM1.00, so a dividend payout of 10-15 sen a year will yield me 15% - 20% on my entry cost, so it will serve as an excellent passive income stream from my invested capital. It is rather hard to find another stock or other investment options that can yield me that much.

For your case, it will depend on your entry cost and your investment goals. If your entry cost is low enough so that the dividend yield can be 7% or higher on your entry cost, then keeping the shares will be a good investment choice. If your entry cost is high, and you can find other investment choice that gives higher yields then you may consider disposing gradually as you switch to the other higher yield options.

I have heard arguments saying that disposing the shares at RM5.00 would give an immediate gain equivalent to many years of dividends. There is certainly merit to such argument, but I would suggest further thoughts to this decision.

Say if you dispose the shares at RM5.00 and put all the money to bank fixed deposits that give you 3% interests a year or put back to EPF that gives dividend yields of 4.2% to 6.9% p.a.
The advantage is that you de-risk on your capital investment, but the disadvantage is that you will no longer enjoy any upside from the company growth and any further capital appreciation of YTLP share price. Who knows, it may continue going up to RM7.00 or RM10.00 or RM15.00 some 10 years later. But your capital in the bank fixed deposit or in EPF remains the same as before.

and who knows the company continues to grow earnings and declare higher dividends every year, from 4% to 8% to 12% some 10 years later on your entry cost. But your passive income from the bank fixed deposits remain at 3% every year and EPF still gives dividends around 6% p.a.

I am a believer in the wealth creation effect from the stock market much better than any other investment options, as statistics already shows that investments in US SP500 in the past 100 years has beaten handsomely investments in bonds or fixed income options.

If you do not believe in that, you should probably not invest in the stock market and put all your money in bank fixed deposits or put cash or gold bar under the bed.

@Abcdefg123456789, I think I have answered your question before, and sorry I have no crystal ball and cannot predict any target price until year end. It depends a lot on developments at the company as well as market sentiment.

If market sentiment is good as we have stability in local politics and more and more foreign funds coming in, then YTLP share price may go up faster (within next 6 months) and higher (PER up to 15x).

@cktay, I think the year you referred to above is Wessex's financial year ended 31 March.

For the 5-year regulatory period from FY2011 to FY2015, the allowed return on asset was quite good and inflation was muted, so Wessex's net profit was good around GBP100-150m each year. Then Wessex got a higher allowed return on asset (WACC) for the following 5-year regulatory period from FY2016 to FY2020, that's why profit jumped to GBP164m in FY2016 to reflect the higher return on asset and higher Regulatory Capital Value (RCV). Then net profit dropped gradually in FY2017 to FY2019, which I think was due to higher operating costs and higher provisions for index-linked bonds (ILBs) (because Wessex issued more and more ILBs). The big drop in net profit in FY2020 was partly due to Covid-19 pandemic that drove operating costs much higher and there was an under-recovery of operating cost allowance in the water tariffs (as the base operating cost allowance was set in 2014 for the 5-year regulatory period of FY2015-2020).

Then Wessex got a much lower allowable return on capital (approved WACC of just 2.92% vs company proposal of 3.60%) for the 5-year regulatory period of FY2021 - FY2025. That's why Wessex's net profit dropped to GBP66-67m a year in FY2020 and FY2021. Wessex suffered a loss in FY2022 and FY2023 mainly due to non-cash provisions for ILBs as inflation was running high at 7%-10% which caused a significant jump in the interest expenses of the ILBs.

The good thing is that inflation in the UK is coming down, and hence provisions for ILBs will be lower going forward. If RPI can come down to the long term normal 2% p.a., I estimate that provisions for ILBs may reduce to below GBP25 million a year from GBP71m in FY2023 and estimated GBP67m in FY2024.

As RCV has expanded to GBP4.0 billion as of 31 Mar 2023, and is estimated to expand to GBP4.3 billion by 31 Mar 2024, so the allowed return on capital for FY2025 may be estimated at GBP4.3b x 2.92% = GBP125m, and if inflation does come down to 2% p.a., then provision for ILBs can come down to GBP25m a year, so Wessex's net profit may come to GBP125m - GBP25m = GBP100 million for FY2025.

For the next 5-year regulatory period of FY2026-2030, Wessex's proposed capex plan is much bigger than before, as is the capex plan proposed by all other water companies in the UK due to more stringent regulations on ESG. If approved by Ofwat, Wessex's RCV will expand from GBP4.5b as of 31 Mar 2025 by another GBP3.5b to almost GBP8.0 billion by 2030.

Then, if the approved return on capital is around 3.0% still, then Wessex net profit may jump up to GBP8.0bn x 3.0% = GBP240 million in FY2030.

If the approved return on capital is higher at 3.60% as proposed by the company, Wessex net profit may hit GBP288 million or RM1.73 billion a year (on GBP1.00 = RM6.00) or may top RM2.0 billion if british pounds appreciate to RM7.00 then.

GBP1.00 = RM6.01
SGD1.00 = RM3.55

Looks like YTLPower earnings for Q3FY2024 will get a further boost.

See he forecast net profit of RM3,643m for FY2025 and RM3,736m for FY2026 for YTL Power.

This is more or less inline with what I have projected and shared before:
PowerSeraya SGD800m -5% to be more conservative = SGD760m = RM2,660m
Wessex Waters GBP100m = RM600m
Jordan Power RM500-600m take RM500m to be conservative

Add up net profit contribution from these 3 assets, we get RM3,760 million a year

I expect Yes 5G to turn around but profit contribution will not be significant in FY2025. Digital bank will only start in 2H 2024 and it may take 2-3 years to break even. Jawa Power profit will be enough to offset any startup losses in the digital bank. 1st phase data centre with SEA to contribute PBT of RM100m there about in FY2025 but I prefer to see the maiden profit contribution in Q3 2024 first to gauge the earnings impact. AI data centre will complete 1st phase in 2H 2024 and I have not much clue on its profit contribution.

Daniel Wong of Hong Leong equity research has been one of the most professional and non-biased analysts so far, his effort should be applauded. I believe his equity clients are laughing all the way to the bank.

https://klse.i3investor.com/web/blog/detail/hleresearch/2024-02-05-story-h-189313588-Technical_Tracker_HLIB_Retail_Research_ndash_02_February_2024

Hong Leong analyst is very good, and consistent in his analysis and recommendation. The few lines in the article on YTL Power basically summarise the outlook for the company.