Alex Chua

Will the price of gas off from peak thus revenue on power generation also off from peak revenue, thus profits?

5 days ago

dragon328

The gas price coming off peak will reduce revenue of PowerSeraya, but may not reduce the profit. As I know, most power generation companies in Singapore tend to hedge almost 100% of fuel costs to protect the profit margin. They sell electricity contracts to customers taking into account the respective hedged fuel costs, so they always earn a "fixed" or "preset" non-fuel margin on top of fuel costs irrespective of fuel cost price movements.

Lower fuel / gas prices will make the overall electricity prices absolutely lower so encourage more uptake, indirectly helping power generation companies to earn more topline and bottomline.

5 days ago

Apple888

Can go up rm1.30?

5 days ago

Alex Chua

What is your opinion data center competition from other players will it be too crowded and some also using renewable energy ; cost overrun due to high solar panel price, yes communication as celcom digi maxis might just software upgrade from 4g to 5g, dnb coverage weak indoors and ytl 4g standards might not be 5g ready?

5 days ago

dragon328

@Apple888, RM1.30 is just a matter of time. I would expect it to be tested within this year

5 days ago

dragon328

@Alex Chua, there will be competition for sure in data centre space, whether it is in the turnkey EPCC role, or solar panel supplier and installer, or EPCC-owner role.

It is easy to be a solar panel supplier or installer, there are plenty in Malaysia, some are even listed companies. To be an EPCC for green data centre, one needs to have construction experience and working capital, again there are plenty in Malaysia who can be an EPCC for green data centre.

What sets it apart for YTLP is its role as the EPCC-owner of green data centre, which requires deep pockets to fund the construction of green data centre and gets the return over a concession period. Also it needs expertise in construction, solar power generation and maintenance, contracting, financing and wide contacts with global data centre clients. You don't get many local players who have all such expertise and financial power.

As for cost overruns due to high solar panel prices, I can assure you that YTLP has decades of experience in dealing with such cost issues in large infrastructure projects and they know how to hedge all costs properly in order to lock in the required profit margin. Another note is that solar power part only forms about 10% of the overall costs for building green data centres, the bulk of the costs are actually related to data centre equipment.

And the 1st phase of the green data centre job at the Kulai site by YTLP has achieved financial closure, meaning that banks have been satisfied with the revenue model, costing and returns of the project before they agreed to lend money to fund almost 80% of the project costs. For such a big project of about RM1.5 billion, banks are usually very careful with the project economics and must be happy with the debt service ability of the project before financial closure.

5 days ago

dragon328

As for Yes 5G business, I am not very optimistic on its potential earnings contribution. I just hope for this division to break even and not drag down the whole group performance.

As for its equity subscription to DNB, it is a separate business decision. If DNB can achieve 80% nationwide coverage, it will be profitable and YTLP's equity investment in DNB will not go down to the drain. Things are quite fluid at the moment and I expect changes along the way.

5 days ago

dragon328

@tonywong8, thanks for the info. Due to the extremely hot weather, it is normal for power demand to surge up in Singapore, especially as oil & gas prices have softened.

Just imagine, when crude oil prices hit above US$100/bbl, electricity prices in Singapore could have hit SG$400/MWh or higher on occassions. Now households there are enjoying electricity prices 30% cheaper than recent peaks, so it encourages higher electricity consumption.

5 days ago

dragon328

@10bagger10, both YTL and YTLP are still undervalued.

YTLP offers higher dividend yields and more secured earnings growth in foreseeable future, while YTL offers potential higher upside potential from its cement division and HSR angle in near future and much higher asset value appreciation from its landbank.

You will need to consider your investment horizon to see which one suits you better.

5 days ago

Alex Chua

Thanks for the comments @dragon328

5 days ago

tonywong8

D328, thanks. Agreed with your informations.

5 days ago

Alex Chua

Sgd and pound getting stronger vs myr. Good for ytl power.

4 days ago

myloh123

D328, i looked at d 31 mar 2023 qtr results, i think im gg to pengsan ...net profits 500m which is 2.5x vs last quarter...6.4sen x 4 qtrs =25sen× pe 8 = rm 2 price ...omg

3 days ago

myloh123

The stock price sud fly tommrw

3 days ago

xiaochen

Let's pengsan together.
Wondering, why only 2.5 sen, so KS one.

Please give us more dividend... nowadays life is so difficult. Susah cari makan o

3 days ago

donnybelowski

Dividend ks coz they wanna save for future, earnings too volatile. Next quarter will be down from higher base.

3 days ago

llwj1985

Power generation segment did really well this time, and looking ahead things are pretty rosy for this segment. YTL though really need to look at how to bring YES 5G to profitability. losses seem to be widening compared to last year.

3 days ago

dragon328

@myloh123, I almost fell off my chair when I saw the net profit figure of RM507 million.

Then when I looked into the detailed breakdown of profits, I also pengsan.

My god, the Power Generation division alone generated Pretax profit of RM806 million. That's crazy. Even after I deduct off associates' contribution (from Jawa Power Indonesia), still pretax profit came to RM760 million.

I suspect some profit might have come from Jordan power project, but I did not see anywhere in the result note that mentioned about Jordan power project. Furthermore, any contribution from Jordan Power will have come under Share of Profits of Investments accounted for using the Equity method, but this Share of Profits amount (RM46.7m) shows no visible improvement in this quarter, indicating that the earnings contribution from Jordan Power was not significant in this Q3 yet.

This means PowerSeraya alone contributed profit before tax of RM760 million in this Q3, that is about SG$230 million of PBT. You can see the taxation rate for this quarter was about 17%, which coincides with Singapore corporate tax rate.

For PowerSeraya to achieve PBT of SG$230 million in a quarter, it is possible. Back-of-the-envelop calculations show that PowerSeraya could have achieved gross non-fuel margin of SG$80/MWh at almost 70% running factor of all its efficient gas plants including the newly acquired Hyflux gas units. The last time Singapore wholesale market registered such a good gross non-fuel margin was during 2008-2013 when supply was tight.

We have seen a few occasions when the wholesale market electricity prices shot through the roof of above SG$1000/MWh during peak daytime in past few months, and PowerSeraya is in a very good position to capture such occasions by running up its open-cycled gas turbines or oil-fired machines to supply to the peak rates. On those occasions, gross non-fuel margin may hit well above S$300/MWh.

3 days ago

dragon328

Wessex Waters registered pretax loss of RM47.2 million in this Q3 FY2022, that is due to interest accruals on index-link bonds, a non-cash impact of RM75 million. Excluding this, Wessex Waters would have made a pretax profit of RM28 million.

Wessex Waters has since revised up its water tariffs from 1st April 2023, and I see this adjustment will add easily RM100 million to its revenue and pretax profit in Q4 FY2023 onwards.

So from next quarter Q4 FY2023 onwards, I see Wessex to contribute normalised pretax profit of RM130m to RM150 million every quarter to YTLPower.

3 days ago

dragon328

The telecommunications division is disappointing with pretax loss doubling to RM106 million in this Q3 FY2023 from RM52m loss in Q2 FY2023. There is not much explanation given, but I suspect its Yes 5G has not gathered sufficient subscribers yet. I am not sure what other costs besides device costs that have been booked in, maybe some cost of subscribing to DNB network.

3 days ago

dragon328

Investment Holding Activities registered a pretax loss of RM45.6 million in the absence of any disposal gain, offset by higher interest income.

This also means that the green data centre has yet to make any contribution to the group profit. This division will start making profit contribution from Q1 2024.

3 days ago

goody99

let see if analysts are able to find out why the profit of the Power Generation division increases 6 folds. If it is something sustainable, we strike gold!

3 days ago

myloh123

D328, i think we hv been too conservative in our forecast of future earnings. If u ask me, ball park ytl power future forecast stk price sud b easily worthed rm 3 to rm 4

3 days ago

dragon328

Dividend of 2.5 sen is declared for this Q3, higher than the 2.0 sen declared last year.

YTLPower typically declares a higher final dividend in Q4 ended June. Let's wait for good news in Q4 in August then, expect higher than last year as well.

Operating cashflows for the 9 months ended Mar 2023 amount to RM2,159 million (before capex), expect another RM700 million more cash flows coming in the final quarter. This can easily fund a final dividend of 4.5 sen or a dividend payout of RM365 million.

3 days ago

myloh123

I think we sud load more, forget about other stocks

3 days ago

dragon328

myloh123, yes we have been too conservative in our earnings projection after looking at this Q3 earnings. One quarter it makes net profit of RM507 million, one year YTLP will make net profit of RM2.03 billion or EPS of 25.0 sen.

Yes I agree that YTLP should trade to at least RM2.00 a share even at a low PER of 8x.

Not to forget that net profit will improve further in coming quarters on the following reasons:
1) Current heat wave that spurs up electricity demand, hence pushing up electricity prices
2) Strong Singapore dollars to over RM3.40 will make PowerSeraya earnings contribution to increase further in ringgit terms
3) Maiden contribution from Jordan power in next quarter or following
4) Improved earnings from Wessex Waters from Q4 onwards after water tariff hikes
5) New earnings contribution from green data centres from Q1 2024
6) New earnings contribution from digital bank venture from Q2 2024
7) Potential more green data centre jobs to be secured in coming quarters
8) Potential power export to Singapore in next 5 years after Malaysia government lifted up the ban of RE export earlier this month

3 days ago

dragon328

If we factor in some of the earnings contribution from the above 8 factors, YTLP earnings may go up 50% more by next year and double or triple up in 2-3 years, with dividends going up to 20 sen to 25 sen every year, which will support share price to RM3.00-4.00 per share.

I will load up more for sure at below RM1.20 now.

3 days ago

troy88

Great result. Well done. YTL mother will surely benefit further

3 days ago

Tibbers

Wondering if EPF guy regret selling or not. or they just trying to liquid their share to cash. now gap up + dividend soon.

3 days ago

BursaKakis

HLIB Research is optimistic about YTL Power's prospects
https://www.nst.com.my/business/2023/05/913506/hlib-research-optimistic-about-ytl-powers-prospects

3 days ago

Alex Chua

those that bought warrant fatt liao

3 days ago

xiaochen

RHB research
We are also guided that the 45%-owned oil shale plant in Jordan has commissioned its first turbine but could incur start-up losses.

3 days ago

xiaochen

Target price of RM2.05.

Long way to go.
Anyway, huat ah.

3 days ago

Kenokaya

Why dividend so little..

2 days ago

Alex Chua

thinking load more YTL or YTL Power..hmnn...

2 days ago

dragon328

https://klse.i3investor.com/web/blog/detail/dragon328/2023-05-26-story-h-269658206-YTL_YTL_Power_Croaching_Tiger_Hidden_Dragon

An update note based on the latest quarterly result

2 days ago

abcb

TP 1.50

2 days ago

xiaochen

下一季的报告继续值得期待。
1. 新加坡的贡献还会持续，因为有电力供应商和政府是有短合约的，加上炎热气候、新加坡经济不错、马币继续跌、电子车充电站的建造和启用、大马出口再生能源。希望约旦的启动费不会太昂贵（应该会不少，因为累积了大约两年。约旦发电站一路来都有运作，不过由于官司因素，收入只一点点）。不过，既然提到启动费，表示在暂时的亏损之后，就是盈利的贡献。
2. 英国的收费调整是从今年4月开始，所以，下一季应该会由亏转盈。
3. YES的亏损，一季100M绝对不会是顶限。YES在亏钱上，非常专业。如果你留意过去YES部分的财报，你就会发现他们很会拿捏亏损的程度。当YTLP赚多的时候，YES就亏多。当YTLP赚少的时候，YES就很奇妙地，既然亏少了。可以说，YES的财报很精明。
4. 数据中心会继续烧钱，还要再烧三季。

2 days ago

Tibbers

tp 1.3 - 1.4 til ex date.

2 days ago

xiaochen

https://juristech.net/juristech/are-digital-banks-profitable/

我一路来都悲观认为，YTLP将来的数码银行，将会是第二个YES。
一个YES已经够力了，再加上另一个数码银行坑。。。
希望YTLP的数码银行越迟启动越好。

假如YTLP大马部门的能力，有A Capital团队的实力，我举手举脚赞成快快开启数码银行。
可惜，YTLP大马部门的能力，有目共睹的。。。

2 days ago

kcwong98

Nu Bank of Nu Holding, Brazil's digital bank is profitable for 2 quarters already due to low costs and many products. Fast penetration rate.

1 day ago

myloh123

Yeah better to stick to what ytl is good at...their core biz in energy

1 day ago

Michael Kwok

Sell call ytlpower 1.30 range or 29-31 mei
27/5/23 9.50pm

1 day ago

dragon328

YTLP is partnering SEA Group in rolling out the digital bank business in Malaysia. SEA has itself started its own digital bank business SeaMoney which reported almost 7x increase in revenue in 2021 to S$470 million. Though it is still loss making, the management expected it to be cashflow positive by 2023 when they hit revenue target of S$1.1 billion to S$1.3 billion.

Any lending business is naturally profitable, earning the difference between the lending rate and funding rate. It is just how good the bank controls its costs and loan profile.

YTL group has been known for good cost control and with the experience of SEA group, I think their digital bank venture will have good chance of making decent profits, especially when both have their own large customer base in Shopee and Yes.

23 hours ago

cooledhawk123654

5) New earnings contribution from green data centres from Q1 2024
6) New earnings contribution from digital bank venture from Q2 2024

Dragon 328, jz to know u mentioned

20 hours ago

cooledhawk123654

u mention q1 2024 is it for ytlp FYE Q1 2024??

20 hours ago

observatory

@dragon328, can you explain how did Wessex Water make a loss due to "interest accruals on index-link bonds, a non-cash impact of RM75 million"?

How does it work? Is the loss due to "interest accurals" also get compensated in the form of higher tariff in future regulatory period?

18 hours ago

dragon328

@cooledhawk123654, I meant Q1 calender year 2024, i.e. Jan-Mar 2024 to see earnings contribution from the first phase of green data centre

12 hours ago

dragon328

@observatory, I do not have any more info than you on this provision item in Wessex, besides the explanation given in the quarterly result notes.

From what I understand, Wessex has issued a few tranches of bonds, some of which may be linked to certain index (which I do not know what index it is). I suspect such bond has a yield that is linked to certain baskets of interest rates like LIBOR. When interest rates move up in the UK, such index-link bond price will fall and yield goes up. UK accounting treatment may require Wessex to mark to market such an impact from higher bond yields, hence the provision.

It is a non-cash item at the moment as it is just a reflection of higher bond yields to pay in the future. But eventually Wessex will need to pay for higher yields to the bond holders. Such higher interest payments will be captured in the next regulatory review of water tariffs to reflect on the higher costs of doing business, hence resulting in higher water tariffs to compensate for the higher interest payments made by Wessex in order to deliver the required services.

12 hours ago

dragon328

Wessex just made the provision in this Jan-Mar 2023 quarter, which means that they may have missed out on adding the impact of such higher interest rates into the water tariff hikes already in effect since 1st April. If so, they may get it reflected in the next review end of the year to determine the required water tariff hike from 1st April 2024.

But I am not too sure if there is any adjustment in the quarterly review or any true-up mechanism that comes earlier than the next yearly review for 1st April 2024.

We will be able to get a sense when we see the result for next quarter April-June 2023 from Wessex.

12 hours ago