Another good show today!!

Lets continue the steady climb to RM2.50 - 3.00.

but for now, it looks like SEM is facing more resistance as share price inches up further. Lets hope for a strong closing

Surprise will come if SEM receives an offer higher than the RM1.3 billion price tag offered by the American private equity fund. If it indeed gets an offer within the requested range of RM1.5-1.8 billion, it will add 12 sen to 30 sen upside to SEM

It does look like your target of RM3.00 is not a distant possibility.

Based on CIMB's report today on SEM, the company is expected to register improved net profits of RM105-108 million every year for FY2023-2024 after disposing off Caring at RM1.3 billion (net proceeds of RM975 million).

I think CIMB has over-stated the interest savings, so I expect SEM net profit should come in at RM90 million level after disposal of Caring, giving EPS of 7.5 sen.

Pegging it at a PER of 30x (slightly lower than its 5-year mean PER of 31.1x), SEM will be worth RM0.075 x 30 = RM2.25 per share for its convenient store business.

Plus the RM975 million proceeds from disposal of Caring, SEM should be worth RM2.25 + RM0.79 = RM3.04 per share.

I do see similarity in share price trend of SEM as what BJFood has demonstrated in past few months. BJFood share price first jumped up from about RM2.00 level when it announced surprisingly good quarterly earnings, then all the way to RM4.80 within a few months, added with company share buyback along the way offsetting director's selling.

SEM share price broke up RM1.56 when the news of the company getting an offer for Caring Pharmacy came out in the market. The company also started aggressive share buyback knowing that the company share is grossly undervalued below RM2.00. Then we saw the news of a director wanting to deal with company shares.

haha pang72, you are even more bullish than I am. My 1st target is 2.50, hopefully to be reached in next 2 weeks, judging by the way it is going up and the aggressive share buyback

Come 2023, the company should have spare cashflows to pare down borrowings gradually as capex slows to a normal RM20-30m a year:

Operating cashflows RM 104 m
minus interest expense (12) m
minus capex (25) m
free cash flows RM 67 m

Capex in H1 FY2022 indeed jumped up high to RM133 million, mainly for the Bidor bus terminal, I think. With strong operating cashflows expected for 2H FY2022, likely to be RM52m - RM6m (interest expense) = RM46 million which may be sufficient to fund the remaining capex for Bidor terminal, I hope.

Notwithstanding a decent PE ratio, Ptrans has quite strong operating cashflows, i.e. RM52.2 million for 6 months ended 30 Jun 2022, annualised to RM104.5 million.

Interest expense for H1 FY2022 amounted to RM6.05 million, annualised to RM12.1 million. So interest service cover will come to 104.5/12.1 = 8.7x very comfortable.

Ptrans may need to accumulate some cash for debt repayment when the current sukuk expires, not sure when but at least 3 years away. Can consider partial repayment and roll over the sukuk for another longer tenor then.

Again last minute push to close at day high 2.02.

OK I will stop doing premature selling, lets wait for 1st target RM2.50

aiya so strong, broke up 2.00

when will it pause?

I am not sure how it will go from here, after having shot up 40 sen in a week.

As it is half way up based on my own target, I suspect it may need to take a breather before climbing up further.

The news is not yet out, just that SEM has received an offer at RM1.3 billion but it has not accepted, holding on for higher offer at RM1.5-1.8 billion. I am sure its share price will reach RM2.50 once it announces an offer above RM1.5 billion.

it is not all bad lah. Even though I also touched on the PFF concern, but the latest 2 quarterly results have shown less dependence on PFF income and more from rentals at bus terminals

@dompeilee, your patience will eventually be rewarded when you pick the right stock.

I also bought Uchitech around RM1.30 in 2014 and made double within 2 years. It was giving 11-12 sen dividend every year then, yielding almost 9%. It was a no brainer.

I also bought Padini at around RM1.35 around the same time when Padini was giving 10-12 sen dividend, yielding also 8%-9%. I sold off too early above RM3.00-3.30 before it went to touch RM6.00.

Furthermore, the idea came just when I heard about the border re-opening of Japan and I do love skiing, and Hokkaido is certainly a place to visit for the good quality snow, for the fresh seafood and for Japanese culture experience

@trader808, glad that you like the article. It did take me few days of work to compile data and do necessary calculations to make up a workable plan that most investors can understand

I posted this article right after the previous surge on 30 Sept

https://klse.i3investor.com/web/blog/detail/dragon328/2022-10-02-story-h1650023261-YTL_The_Journey_Continues_to_the_Land_of_Rising_Sun

Incidentally, there has been a big surge by thousands in readership of this article in past 2 days. I guess my article has managed to circulate to the hand of some fund managers

It happened once before on 30 Sept with share price last minute pushed up to 0.58 too with total volume of 17.5m traded on the day, but there was no announcement of company share buyback after that. This shows that the huge buy-up was done by a large investor or a fund

sometimes the company announces the share buyback the following day noon time. Lets see

Just now last minute volume was over 19 million shares

@dompeilee, that is for EPF disposal on 17 Oct

another good show today, just half way up. First target is RM2.50.

Company embarks on aggressive share buyback, indicating a good deal is coming soon

YTL share is grossly undervalued, the last minute buy up should either be company share buyback or EPF adding positions.

@Noni, Tun M is a gone case. YTL has never relied on this old man for growth. Most of its prime assets are actually in overseas AAA-rated countries such as the UK, Singapore and Japan.

However, YTL is still competitive in local scene, having bagged one of the digital bank licences.

Uncertain times now, too many moving parts. Unpredictable things may happen over next few months. Be cautious in trading. Bottom fish YTL for long term investment.

Luckily I have collected enough at 1.55 level. I already gave hints last month after SEM announced the strong quarterly result, it would be the next BJFood.
I only had small positions in BJFood collected around RM2.00 then it shot up like mad to as high as RM5.00. Now after splits, it is testing previous high again.

Another day of good show!

well done, 5th consecutive day of gains!

The received offer of RM1.3 billion for Caring is worth almost 80 sen for SEM's 75% stakes. Today up only 8 sen, still long long way to go up

US PE fund Carlyle is making an offer to buy over Caring Pharmacy from SEM at RM1.3 billion, still a bit lower than the desired valuation of RM1.5-1.8 billion that SEM is looking for.
But with Caring Pharmacy taking over JOM Pharma and adding another 15 outlets to its staple, valuation will no doubt increase over time and sooner or later exceed the minimum RM1.5 billion valuation

This RHB analyst still could not see the potential of MCement, same for many investors unfortunately

Something is wrong as Genting share price keeps dropping despite the announcement of promising data from TauRX. Most investors are not convinced that it can get US FDA approval?

Newspaper reported that the telco stakeholders would be able to appoint 3 directors to DNB. YTLP with 20% stakes should be able to appoint one director in.

tonywong8, I am not too sure, but first getting a 20% stake will enable YTLPower to equity account of DNB future profits (getting anything less will not make it possible). DNB being the only body rolling out the 5G backbone in the country will likely be able to generate some reasonable returns on its investment, as private telcos own a collective 65% stakes and would not make it to lose money. The 5G service fees will be structured such that DNB will be able to make a high single digit return on investment, I think.
Secondly, being one of the larger shareholders, YTL will be able to participate in future decision and policy of DNB and the 5G industry as a whole, taking some advantage to protect its interests and to ensure level playing ground for all 5G service providers.

The total amount of debts is itself not scary, but if a company does not have positive operating cashflows to service the debt, then even if its total debt is small, the company will still go bankrupt even though on paper it reports high accounting profit (like Serba Dinamik).

You should not be too worried of taking debts, otherwise you will have to pay all cash to buy a house.
But for a company, the cost of equity is always higher than the cost of debt, so it is more capital efficient to gear up when the company acquires an asset. The key thing is that the asset being acquired must yield returns higher than the cost of debt.

With total assets in excess of RM72 billion and positive operating cashflows of over RM1.5 billion a year, what makes you think that YTL cannot survive?
A simple analogy - if a person buys a freehold property for RM720,000 and borrows RM294,000 from banks. He has annual income of RM35,000 and needs to pay bank instalments of RM12,500 every year. If the freehold property continues to appreciate in value and his income gradually increases over year, will he go bankrupt?

You also need to look at YTL's operating cashflows (before capex and working capital changes) which are strong: RM1,641 million in FY2022 and RM1,593 million in FY2021. Operating cashflows before debt service amounted to about RM3.5 billion in FY2022 & FY2021, providing a interest cover ratio of 2.9x which is way above norms.

True that net profit for FY2022 only totalled RM530 million, but it is already a big turnaround from RM368 million loss in FY2021. The loss was due to COVID-19 pandemic when most hotels and resorts hit zero or low occupancy and shopping malls had low footfalls. Furthermore, there has been no big infrastructure projects in past few years, which has slowed YTL's construction profits and cement demand.
However, things are looking bright after the pandemic with crowds flocking back to YTL shopping malls & restaurants, and YTL hotels getting occupancy rates close to pre-pandemic levels.

@wps123, first of all, lets get the fact right. Based on YTL quarterly report as of 30 June 2022, total debts amounted to RM42.2 billion with total cash of RM11.3 billion and short term investment of RM1.5 billion. So net debt amounted to RM29.4 billion.

To diversify from cyclic business, can take a look at MCement's parent YTL Corp which will benefit from surging earnings from MCement and rebounding hotel business in Japan, Australia, Singapore and Malaysia

https://klse.i3investor.com/web/blog/detail/dragon328/2022-10-02-story-h1650023261-YTL_The_Journey_Continues_to_the_Land_of_Rising_Sun

YTL REIT will start giving high dividends again from this FY2023, after the 2-year deferred rental program finished by June 2022. With COVID pandemic under control now and Japan borders re-opened, things are looking up for YTL REIT as well as its parent YTL Corp. There is huge potential for its Niseko landbank to be developed over next 10-15 years and substantial value (as high as USD6 to USD7 billion) to be unlocked

https://klse.i3investor.com/web/blog/detail/dragon328/2022-10-02-story-h1650023261-YTL_The_Journey_Continues_to_the_Land_of_Rising_Sun

For reason unknown, the admin has removed my posts. Now reposting

https://klse.i3investor.com/web/blog/detail/dragon328/2022-10-02-story-h1650023261-YTL_The_Journey_Continues_to_the_Land_of_Rising_Sun

As I mentioned in the article, YTL gave away 3.0 sen dividend for FY2022, yielding 5.5% at current share price. This will make it a suitable long term investment for funds like EPF who gave out dividends of 5.2% to 6.1% in past 4 years.

If YTL lists up these assets at Niseko as a REIT in Japan, this Niseko REIT would be worth RM37 billion at 5% yield. That would make YTL stock a 6-bagger straightaway.

If YTL chooses to develop the Niseko land at sustainable pace and keep 20%-30% of the resort homes, total recurring income from the hotels, resorts and serviced suites there may top RM1.8 billion a year. Minus off Japan tax rate of 45%, net income still top RM1.0 billion a year or 9.0 sen per share. At 6% dividend yield, this dividend stream from Niseko would enable YTL share to trade up to RM1.50.

In 15-18 years time, this Niseko landbank would be worth close to USD5.0 billion if YTL keeps it without developing it. That would be almost RM23 billion or RM2.11 per share. Monetising it then would make YTL stock a 4-bagger.

The Niseko landbank of YTL is worth USD2.0 billion or RM9.3 billion at today's value, which is already larger than YTL Corp's market capitalisation of RM6.1 billion. This means we are getting all other assets like YTLPower, MCement, YTL Hosp REIT, Starhill Global REIT, Sentul landbank, construction arm for free.

@KINGV, I agree with you and I think most of YTLP's debts are at fixed rates, in the form of mid to long term bonds issued when interest rates were at decade low. Singapore interest rates have risen but are still at low level, furthermore PowerSeraya does not require to raise much fund in next few years for any expansion/capex but rather will generate very strong cashflows.
For projects in Malaysia, i.e. green data centre park, the capex spend will span over 8 to 10 years. For the 1st project now, YTLP has already got sufficient funds from the disposal of Electranet.

The only weak link will be at Wessex Waters which will need to raise more funds for capex spend to 2025. Hopefully it will be adequately compensated through higher water tariffs from next year.

It is definitely a good time to accumulate YTL which is at decades low. But stock market sentiment is very bad now, negatively affected by various external factors. We need to find a good time to accumulate more when downside is limited, I hope it can find a floor at 0.50-0.55 in next few months.

Post removed.Why?

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