hello Pinky, I have been here since 2022. Lets hope Wellcall can catch up to RM1.80

Good closing today, finally bottoming up!

excellent set of quarterly result!!

Net profit jumped up 70% y-on-y and record dividend possible for this year

@probability, I have put more weight on YTL Power before the start of their share price rally when YTLP was trading at RM0.72 and YTL at RM0.53 last year. Now at current prices, it is a tough call.

YTLPower will continue to see strong earnings and strong cashflows hence enabling it to declare dividends of easily 15 sen per share each year for FY2024-2025, yielding 8% p.a.

YTL may declare dividends of 9.5 sen per year for FY2024 and FY2025 as guided by Francis Yeoh, yielding 7% p.a. But YTL may have more surprises in several other things such as explosive earnings from MCement, bagging of MRT3 project, revival of HSR project, monetisation of its various assets etc.

The choice is yours.

thanks cgtan2020. Ya it does look like the surge in YTL Power shares this morning was due to this inclusion into FTSE Asia Pacific index. This will enable foreign funds to put more weight onto YTL Power.

More will come when YTL and YTLP is included as KLCI component index stocks in next review.

haha TeamRocket must be biting sour grapes or completely out of his mind.

Bad sentiment in China and the USA will cause YTL share to gap down 9-10% tomorrow?? What kind of logic is this?

Another good thing about such WTE project is that it can replicated elsewhere. As the news article suggests, Selangor generates 10,000 tons of municipal wastes a day, and this WTE project at Rawang will burn 2,400 tons/day of wastes or about one quarter of the daily waste volume generated in the state of Selangor.

If this first project is successful, it may pave the way for further WTE projects in Selangor and other states. YTL group has several advantages in developing such WTE projects :
- YTL Power has decades of experience in developing power projects
- YTL group has long and reputable history of construction experience
- YTLP has deep pockets with net cash of over RM1.0 billion at holding level and over RM2.0 billion of free cashflows a year for next 2-3 years
- YTL/MCement has cement plants at several locations in Peninsular (Selangor, Perak and Pahang etc)

At total project cost of RM4.5 billion, assuming debt to equity ratio of 80%, YTLP's share in the JV of 70%, project loan tenor of 15 years and low teen project IRR, YTL Power will inject equity money of RM630 million and in return get its share of project cashflows of RM45 million a year initially rising to RM320 million a year after project loans are fully repaid.

I think this WTE project will have a net power output closer to 58MW as reported by The Edge than to the figure of 132MW stated in the news link below.

Anyway this is a good development for YTL Power as it will add a new stream of recurring income over next 30 years or so and good for MCement/YTL as it will get fly ash from the WTE project as raw materials for cement production. This WTE project has long been mooted with EIA studies already done and hence I don't expect much hurdle to its implementation. Such WTE projects are very common now and have proven very effective in dealing with the ever increasing municipal wastes with limited environmental impact to surrounding areas. Some good examples are those modern WTE plants in Singapore such as the one in Tuas south that burns 2,400 ton/day of wastes and Senoko WTE plant that burns 2,100 tons/day of wastes.

Posted by moncmondo87 > 23 hours ago | Report Abuse


To add to Ravi Kumar's reference above -
this link was posted last month - https://voiceofasean.com/government/kdeb-waste-management-power-from-waste/

Yes, fundamentally MCement should be worth over RM5.00 by any measure

MCement is only playing catchup, Hume cement has doubled its share price. MCement should double also to RM4.50

MCement adding 60 sen or over RM1.0 billion to its market capitalization, it has added over RM800 million value to YTL's 77% holdings. Interesting to see when YTL share price will catch up...

MCement will either report a super good quarterly result next Friday or will see a favourable corporate exercise coming soon

@moncmondo87, I have taken a look at the daily trading report from EMC. I see that TPC only started to apply from period No. 34 onwards on Monday 14th August 2023. USEP hit the max of S$4,500/MWh in period 26 and continued hitting above S$1,000/MWh until TPC came in period 34.

I remember there is some mechanism for TPC to come in, at certain lag of 24 periods or 48 periods after the forecast demand is higher than forecast supply. But I cannot find the TPC paper from EMA website anymore.

Anyway, it is still possible for USEP to hit S$4,500/MWh for some periods up to 24 or 48 before TPC comes in.

Whenever USEP hits S$4,500/MWh, you know that the supply is very tight.

If you look at SEA financials more deeply, it still registered good operating cashflows with cash balance swelling to US$7.7 billion as of 30 June 2023. Though it may incur higher capex and some accounting losses in next few quarters, but as long as operating cashflows continue to be strong, I don't see any problem for the group in expanding its businesses.

It was not an easy task for SEA to turn around with net profit of over US$300m in June 2023 quarter from a loss of over US$1.0billion last year. The management has done a good job in cutting costs and terminating loss-making ventures, as evident from consecutive 3 quarters of profits.

To note is that its digital bank business, SEA Money registered good growth of 53% in revenue to US$428 million and achieved adjusted EBITDA of US$137 million. Total loans receivables remained stable at around US$2.0 billion with non-performing loans remaining stable at 2%.

Anyway, SEA has only committed to the first phase of 48MW data centre with YTLP's green data centre park in Kulai. YTLP has secured a larger data centre deal with GDS for 168MW, more to come.

I don't think any YTL company owns any shares in SEA group. The historical share price plunge in SEA last night was due to its chairman's statement of possible venturing into new markets and incurring losses in coming quarters.

As far as I know, SEA's online shopping business is still thriving, growing at over 20% from last year. I am not sure about its livestreaming business. In any case, SEA requires large data centres for its operations whether online shopping or livestreaming businesses. I see no impact on YTLP's data centre business from SEA's share price plunge.

@moncmondo87, how could it possible for USEP to hit $4,500/MWh two days ago after TPC kicked in?

@Alex Chua, as mentioned before, I am looking at Bonia and Padini besides YTL/YTL Power

I think Tan Sri meant RM1 billion dividend if utilities and construction & cement divisions perform well as expected

But overall this is positive to the share price rally of YTLP, as Kenanga TP of RM1.85 currently is based on a very conservative earnings projection for FY2024. If YTLP proves that its earnings from Q1 FY2024 is not much impacted by TPC, then analysts will upgrade the earnings for FY2024 and raise TP further.

Kenanga may have got it right for the 4Q FY2023 earnings which will be higher than 3Q, but they have got it wrong on FY2024 earnings which show lower numbers than FY2023. This does not make much sense to me unless they predict a 50% drop in PowerSeraya earnings in FY2024 along with the 55% drop in USEP. If so, then it shows that they do not understand how the business works in Singapore competitive electricity market.

Power companies in Singapore make the bulk of the profits from generation which is over 95% hedged with retails contracts and vesting contracts. This is made very clear from Sembcorp result presentation slides which show that the company will rake in more longer term contracts and leave spot exposure to just 4%.

Secondly, YTL chairman is confident of giving out RM1.0 billion dividend a year for FY2024 and FY2025, which means the company forecast strong earnings from PowerSeraya to continue at least for another 2 years to 2025. There will be new baseload new generating units coming online in 2026 so supply tightness will be eased and so it may impact the retails contract margin. How much it will impact retails margin will depend on how much long term contracts Sembcorp and Keppel will sign up for their new capacity and how much high pressure steam sale to third parties they will have (which will reduce the net generation output).

@cgtan2020, pls check the presentation video at 09.08, the slide shows that as of 30 June 2022, Sembcorp spot exposure for its gas plants was 8% and as of 30 June 2023, the spot exposure was 4%.

So my earlier assumption of 6% spot exposure in generation volume seems appropriate.


https://webcast.openbriefing.com/Sembcorp_1H2023/player/?player_id=51514
From the CFO comments, 1:16:00 onwards, if TPC is implemented on H1Y23, to take care of the spike, it will have S$60Million impact on the S$435Million net profit, or 13.7%. Just to be fair to @hng33, USEP will have impact to YTLP net profit in coming quarters, some say 8%, some say 10% of the power sectors, it depend on their spread on contracted customer. Hopefully other sectors can cover the reduction profit in power generations. Overall the CEO did say with TPC in place, efficient power generator like them will still make a decent profit onwards.

Having said that, I am still happy to see if PowerSeraya could have made extraordinary gain of S$30 million from long generation into the pool in the upcoming Q4 results.

@cgtan2020, in the case of Sembcorp, the CFO said there would have been a 13.7% impact on its net profit in 1H 2023 should TPC have been implemented in 1H 2023. Pls take note that the stated impact is on dollars terms which was S$60 million out of net profit of S$435m in 1H.

The impact in dollar terms could be as high as 13.7% but in electrical power (GWh) terms it could have been much lower. Take an example, say Sembcorp base load generation hedged with retails and vesting contracts for 1H 2023 was 5,000 GWh (vs 6,600GWh for PowerSeraya) and it secured an average non-fuel margin of S$75/MWh in 1H (vs S$80/MWh in Q3 for PSeraya), so the base generation margin would have been:
5,000 GWh x S$75/MWh = S$375 million

Then Sembcorp could have sold long generation (assumed 6%) into the pool at much higher margin of say S$200/MWh, so it could have earned a gross margin of:
300 GWh x S$200/MWh = S$60 million by selling long into the pool taking advantage of power price surges

You can see in terms of long generation volume, it could be just 6% (with remaining 94% hedged with retails and vesting contracts) but the financial impact was 13.7% as power prices were very high in 1H 2023.

Now with TPC in place, power prices have been remaining low close to SRMC of CCGT so gencos are not able to realise any big extraordinary gain from long generation. It will impact at most 5% to 6% of gencos' generation. I am not worried about the loss of such long generation gain, as long as the base load generation continue to get decent margin, just like what Sembcorp CFO said with their efficient fleet of machines.

@cgtan2020, the industry people who are familiar with the electricity sector in Singapore do not bother much about the fluctuations in USEP as they know most of the companies' profit is hedged through retails contracts and vesting contracts with almost 100% hedged gas costs.

Only consumers and independent retailers care about USEP, as they take the risks on the typical norm of USEP being at a discount to the retails contract price.

Why USEP is normally trading at a discount to the retails contract price or vesting contract price? It is because the retails contract price and vesting contract price have incorporated in a non-fuel margin on top of the fuel costs (or we call it short run marginal cost SRMC). When the supply is tight and demand high, this non-fuel margin tends to be high like we are seeing now. Historically this non-fuel margin may hit S$60-80/MWh during tight supply. When there is over-supply of capacity, gencos dump the prices and non-fuel margin may get to as low as S$20-30/MWh like in the period of 2017-2019. During 2014-2016 when there was severe over-supply of capacity coupled with the Take-or-Pay clauses in the gas supply agreements, gencos dumped prices to extreme low in order to keep their machines running and all made losses then.

In the wholesale electricity market (or we call it the electricity pool), gencos typically bid their selling prices at the SRMC of their most efficient units (which are combined-cycle gas plants CCGT) first then the less efficient open-cycled gas units followed by heavy fuel oil steam plants. Under normal situation where the demand supply is quite balanced where the most efficient CCGTs are enough to meet the demand, then USEP will be cleared at the SRMC of CCGT units. This appears to be the situation from July 2023 onwards (after TPC is in place and EMA intervened) when we see USEP trading at S$160-180/MWh which coincides with the SRMC of CCGT units. Only when there is a CCGT unit down or a sudden demand surge then USEP may clear at the SRMC of a less efficient open-cycled gas unit or fuel oil-fired steam unit which is above S$200/MWh. There is the reason why we are seeing USEP being at a discount to retails contract price (which is above S$250/MWh) or vesting contract price, as USEP does not include a non-fuel margin.

Whether or not this situation will encourage more independent retailers to come in to buy power from the pool at USEP and sell to consumers at a margin depends on the risk appetite of the retailers. Some have already gone bankrupt after a period of power price surges in Q1 & Q2 2023. Furthermore, the EMA has tightened regulations to ensure retailers will not go bankrupt so easily by forcing them to hedge at least 80% of their electricity purchases, and not 100% subject to USEP fluctuations.

Will consumers choose these independent retailers to buy cheaper? Consumers will need to assess the risks with these independent retailers and product offerings by them. If these independent retailers are not able to offer fixed price contracts for 12 months or so because their cost of purchase is not fully hedged (as it depends on USEP which fluctuates every 30 minutes), then not many consumers will sign up with them as they have experienced power price surges in Q1 & Q2 when these consumers paid much higher electricity prices than other fixed-price retails contract. This is especially so for corporate and industrial consumers who need to do a budget of their utility bills.

So yes, there will be consumers who will switch to independent retailers and take risks on USEP fluctuations but I think the number is not big.

@Muyutin, I am not trying and not able to push YTLP to RM5.00. We can just wait for it to run its course and time will tell. Along the way there will be skeptical people and remarks, YTLP just needs to demonstrate that the company will be able to make EPS of 30 sen or more a year and declare dividends of 15 sen or more for FY2024 and FY2025. Then only analysts and fund managers will be convinced of its earnings power and strong cashflows.

We talk so much now, there is no use. It is not for us to prove anything, but for the company to prove and its Chairman to prove his claim of paying RM1 bil dividends every year.

If you believe in your analysis and the company prospects, just hold tight for 2 years. Who knows? It may hit RM5.00 one day.

Singapore has about 2 million households, and if 5% has EVs then the potential demand is for 100,000 EVs. If 10% households have EVs then the demand will go up to 200,000 EVs and 2,000MW power demand

@Muyutin, EV car charging can have a big impact on power demand especially in a country like Singapore.

For example, if there are 100,000 EVs charging at night using a 10kW charger at home, the power demand will go up by:
100,000 x 10 kW = 1,000 MW

The average power demand at night in Singapore is about 6,000-6,500MW, so an additional 1,000MW power demand would be a significant 15% increase in night demand.

hng33, you can blame me on trying to defend the stock causing you not able to buy back at lower prices.

But the volume is so big that the share price does not go up just bcoz a few words that I said, or the share price will go down just bcoz of the few remarks you made. YTL share price rally from RM0.70 when I first made the buy call last May until RM1.50 today is because YTLP has shown the numbers and big funds are getting to recognise it. Today 32 million shares of volume is no small fish playing.

@xiaochen, well said.

PS高盈利的关键，是在于电力高需求，导致电供量吃紧。
PS高盈利的关键，是在于电力高需求，导致电供量吃紧。
PS高盈利的关键，是在于电力高需求，导致电供量吃紧。

我个人是不放大USEP的因素，因为2021年，10-12月USEP也是非常的高。2021年，PS并没有高获利。

2022下半年，7-12月，和20231-3月的分别也都差不多一样。但是为何2023 1-3月的盈利会暴涨？电供吃紧咯。

@hng33, you missed the point and missed the fact. The exposure to wholesale market is less than 10%, never at 30%.

Vesting contract price is adjusted every 3 months according to gas prices and FX, and all gencos hedge almost 100% of their vesting contract requirement on both forward gas prices and FX, so gas price fluctuations never affect gencos' earnings from vesting contracts which thelselves are just a form of Contract-for-Differences (CfD). You may want to download the relevant documents on vesting contracts from EMA website to understand better.


It may be right to say that wholesale prices for July-Sept 2023 quarter will be lower than that of April-June 2023 quarter as TPC kicked in from 1st July 2023. Again, it will affect the margin from long generation that sells into the wholesale market, which I estimate is lower than 5% of overall PowerSeraya earnings.

For any stock in a multi-month rally, it is normal to have healthy corrections along the way so that the rally becomes sustainable. When it hits a new high, some will take profit and when it has corrections, it allows others to come in.

YTLPower had a similar correction after it hit a new year high of RM1.36 on 31st May 2023, the next day it went down as much as 10 sen.

Thank you hng33 for giving us the chance to buy low again.

Sembcorp has already announced its results for June 2023 quarter and the result showed that its Singapore power division made good profits. Most of the analysts' reports on Sembcorp following the quarterly result has upgraded the company with higher profit projections and acknowledged that its Singapore power division will continue doing well in next 2 years. You can check and verify this from the various reports available online.

I see today action as a healthy correction to force out weak holders and hence a good buying opportunity for long term investors. It is just like the incident on 20th June 2023 when the news of the EMA introducing the TPC was out and some traders sold the shares of YTL Power down by 15 sen to RM1.15. I managed to scoop up a lot at 1.16-1.18 then. Those who were brave enough on 20th June to buy cheap are now sitting on good profits, despite the healthy correction today

first, PowerSeraya typically hedge over 90% of generation with retails contracts, so the exposure to the wholesale market will never reach 30% as claimed by some quarters.

Secondly, a few small retailers have gone bankrupt and the remaining retailers are mostly have own generation arm. The remaining retailers will not dare to go long on buying all generation from wholesale market and sell to customers. In fact, the EMA has already set regulations to force all retailers to hedge their electricity purchase to 80% minimum. No retailer can buy cheap from wholesale market and sell high to customers in a big way now.

The wholesale electricity prices will naturally soften after the TPC is in place to cap the prices to 2x to 3x Long Run Marginal Costs, which they estimated to be SG$450-700/MWh.

In fact, I am happy to see more steady wholesale electricity prices (without a lot of surges beyond SD$1,000/MWh) so that some smaller retailers can survive and there will not be much complain from consumers. The EMA will also not introduce more drastic measures to intervene in the competitive market.

This leaves gencos to steadily earn decent profits from the retails contracts.

I have said a few times, the fluctuation in wholesale electricity prices does not have much impact on PowerSeraya profits as over 90% of its generation is hedged by retails contracts which last from 6 months to 2 years. PowerSeraya said in end May that the company had managed to lock in retails contracts at good margin for 2 years and locked in gas supply at attractive prices.

Why the rush to sapu 2.8m shares at 1.55 last minute?

This news article mentions that Sembcorp has contracted with Singtel and Micron for long term PPA for 10 year, 80MW and 18 years, 350MW respectively. That partly explain the need for Sembcorp to build a new cogen plant of 600MW. So a big portion of the existing cogen plants has been contracted for long term supply to big clients, leaving not much for the surging peak demand.

https://www.theedgesingapore.com/capital/brokers-calls/analysts-optimistic-sembcorp-industries-all-keep-buy-raised-target-prices

you see both Keppel and Sembcorp are like Government-linked Corporation (GLC) which may be forced to do some sort of national service, hence both have committed to invest in new power plants to meet the power demand growth in next few years. The big 3 (Senoko, Seraya and Tuas) have been privatised and owned by foreign investors who are less likely to invest big money in the competitive market after suffering losses in 2014-2017 when there was an over-capacity in Singapore. Investors are scared of the EMA doing too much intervention and flooding the market with too much capacity hence crashing the power prices.

Hence I am skeptical of the proposed 600MW capacity being solicited by the EMA. It is a free competitive market. When power players think that there will be power demand, they will make a business decision to invest in new capacity. If they think there will be a lot of new capacity coming in, then they will hold back on any new investment. So I am not sure how the EMA is going to solicit this new 600MW plant to be up by 2028. Will there be any incentive offered by the EMA for this new plant? Any guarantee on capacity uptake or profit guarantee? obviously no.

I just hope that the power players in Singapore will be conservative enough not to be too aggressive in new plantups which will hurt everybody in the game.

@Sslee, yes the total power output from the gas turbines and steam turbine will be 600MW. What I wanted to point out was that a cogen plant has other outputs like high pressure steam and demineralised water besides electrical power. Part of the power output is used to generate the high pressure steam which is piped away to nearby industrial plant uses. Hence the net electrical power output is typically lower than the nameplate capacity of the gas turbines + steam turbine.

In fact, Sembcorp already has a cogen plant running, the nameplate capacity is 765MW (if I remember correctly), but the net electrical power output available for export to the power grid is about 500MW. Part of the high pressure steam is piped away for export to nearby industrial plant, instead of all going into the steam turbine to generate electrical power.

I could have missed this Sembcorp cogen plant. Being a cogen plant, part of the power output will be used to generate high pressure steam and demineralised water, so the net power output will be lower than 600MW, typically around 2/3 of nameplate capacity or around 400MW.

So now we have 2 firm new plants coming online in 2026 and another to be solicited by the EMA (not firm). If we factor in all three, total new capacity would be 600+400+600 = 1,600MW coming online by 2028. This would be just enough to meet the projected peak demand growth of 1,500MW - 3,800MW in next 5 years.

@xiaochen, yes based on recent news flows, it appears to be 2 new power units announced so far, one being the 600MW hydrogen-fuel ready unit, another 600MW unit as an open unit solicited by the EMA targeting completion by 2028.

The one tendered out by the EMA is still not certain yet as I am not sure if there is enough interest from private developer to pour in hundreds of millions dollars to develop a big plant when there is no visibility as to when and how much the EMA will bring in RE import. I expect this bidding process itself may take few months to conclude then another few months for the winner to achieve Final Investment Decision, followed by 30-36 months of construction and commissioning.

The Star news article mentions about bullish projections by the EMA of the peak demand in Singapore over the next few years, with peak demand projected to rise by 1,500MW to 3,800MW from currently 7,800MW to 9,300MW - 11,600MW by 2028. So even the proposed 600MW new capacity coming in at end of 2027 and Keppel's 600MW new unit coming in 2026 may not be enough to meet the increase in peak demand in 2028.

That's good development. It shows that the current electricity market in Singapore is very tight and no private developer has any plan to build new power plant besides Keppel. EMA definitely sees the need for a new power plant and hence seeks bid to build a new plant by 2028. But what's the incentives of building a new power plant while the capex of building one is quite high, and there is no certainty that the new power plant can make much money after running in 2028?

No worries. YTL is a bluechip stock that you can hold on and sleep well. Both fundamentals and technical signals look promising for greater heights in coming months

The news reinforced my earlier view that SEM was grossly undervalued.

I have also asked but nobody seems to know what was happening at Tokyo

Heavy volume today and share price closed flat. Good sign