Assuming every 5 years forward, Wessex would incur same capex and RCV would increase by same 500 million pounds, then returns to equity would go up to 3.4% in 10 years, 3.7% in 15 years and 4.0% in 20 years. My point is that for a fund that invests in Wessex now, it will get increasing yields / returns on equity over time. Regulated assets like Wessex is so valuable that many long term funds are looking to buy but owners will not sell anything cheaper than 1.5x RCV now.
JJPTR, as per YTL Corp quarterly report ended 31 Dec 2021, it had cash of RM2.815 billion and another RM8.579 billion of fixed deposits, total RM11.4 billion cash. The total debts of RM11.7b + 31.998b should have included debts at Wessex and Jordan as YTL Corp owns some 55% of YTLPower and so should have consolidated all the cash and debts of YTLPower.
Many Public listed companies which are family owned and run, also very undervalued. The problem is the Board and management only reward and enjoy the wealth themselves through many ways. Every year, these companies throw 5% dividend to shareholders , just like beggars, while keeping the cash in the balance sheet. Shareholders can see the huge pile of cash but shares prices go down because the management is unable to deploy those cash effectively to create earnings growth to move up share price.
I think u guys can become the ceo/cfo of ytl so u can give all the cash to shareholders and damn with business expansion. Just sell off the company and return all the cash to shareholders and everybody would be happy right?
I think the YTL management has been trying to pay dividends as generously as they can. YTL has given out a total of RM28 billion of dividends in past 10-15 years. In the past 2 years FY2020-2021 when it made a small accounting loss, YTL still paid out 2.5 sen of dividends.
Yes dividend payouts have been cut down in past few years as business operations of its subsidiaries were affected by covid-19 pandemic and other reasons, but things should be looking up again soon.
It is easy to say to distribute out all cash in balance sheet and close down the company. I hold a contrarian opinion, in fact I think the best is still to strike a good balance of giving decent dividend yields of 6%-7% p.a., while maintaining a good cash warchest to get ready to scoop up good assets at bargain sales. And I think good opportunities are coming in next 2 years as US interest rate hike cycle kicks off aggressively and soon we may see many companies going into bankruptcy.
It would be nice to get a supernormal dividend now from the company but that cash dividends received by us now might be hard to generate more income than it would when sitting at the company. Small investors like us may buy some stocks at cheap prices but it would be very difficult for us to buy up a good asset of say RM1.0 billion that could give good returns. But YTL is now in a good position to look for bargain sales. It would be nice if it could get another choice landbank like the Niseko land at distressed price, or buy into another world class hotel like The Marriott at Sydney Harbour. For a start, YTL will deploy some of its cash into good use by developing the digital bank it owns with Sea Group.
YTL has increased its borrowings when buying up good assets in the past 10 years. It takes time for these assets to develop and increase value to a certain level for YTL to lock in profits. For example, when it bought the Niseko land at just USD60 million and quickly sold it off at say double the price in the following year, then it would have missed out on the explosive value growth of the Niseko land in past 5 years, which has ballooned to a market value of USD2.0 billion. Of course it is now subjective as to whether it is the right time to sell it. One may say a capital gain of over 30 times in few years is very good already, but another may say if you sell it now, what if the land value became USD10 billion 10 years later??
Nothing is absolutely right or wrong in business, just like you never buy a stock at the lowest and can never sell a stock always close to the peak. I have conviction in this YTL management to deliver this time round.
Of course we need to assess what YTL management will be performing in next 24 months. If there are plenty of good assets up for grab and YTL would still be sitting on a huge cash pile after 2 years without making any significant acquisition nor distributing higher dividends, then I would be also very unhappy. We should all then go and attend the AGM and try to vote out the management and vote against any director fee payment to the directors.
I've been watching & waiting for major deal during COVID pandemic. All I see is the cash building up in war chest and same song being played. Even Warren Buffett pulled the trigger a few times last 3 years.
ryan7642, haha not really a hardcore fan, but I do receive complaints from a few friends who bought high at above RM1.00. Then I looked at it and found that there is a good chance for the company to rebound strongly this year and next. Ya let's earn big together, nice!
If a company is so undervalued, you must be aware that there's not much share buy back despite the share price drop for 10 years. In the announcement section, all I see is ESOS , ESOS and more ESOS. How long term shareholders make money for the past 10 years is beyond my imagination. What's for sure, the management have been enjoying good days everyday
That may be right. The company needs to do something to reward long term shareholders, not just gives ESOS at cheap prices to themselves and employees. It should embark on aggressive share buyback to at least support the share price, like what IGBB has been doing. With improving operating cash flows, the company should increase the dividend payouts as soon as possible. When the price is right, it should sell some of the assets to realise profits and return special dividends to long term shareholders.
looiting, you should go attend YTL AGM pakai koyak koyak and shoot the management on why the share price is at such a depressed level. Lets see then if they still pakai cantik cantik and talk bullshit. We support you there
Definitely undervalued with strong balance sheet. But management is not keen to reward minority shareholders. Y family are all in the company enjoying the cake. Minority shareholders can only hope they will deliver growth..
CIMB research forecast that the potential pie for digital banks will be about RM10 billion, so each digital bank may rake in annual revenue of RM2 billion each on average. With net profit to revenue ratio of 31% (eg. Ambank) to 52% (eg. Hong Leong Bank), each digital bank may potentially make a net profit of RM2.0bn x 31%-52% = RM620 million to RM1,040 million a year when matured
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....