YTLPOWR (6742) : YTL Power International - 1Q15 core net profit grew 3.8%
Target RM2.34 (Stock Rating: ADD)
YTL Power's 1Q15 core net profit of RM243.8m was in line with our and consensus estimates, accounting for 24% of our full-year forecast. While revenues declined yoy to RM3.36bn (from RM3.98bn in 1Q14), earnings rose 3.8% yoy due to forex gains in its investment-holding division. No dividends were declared during the quarter, which was expected. We make no changes to our earnings forecasts while our SOP-based target price is reduced to RM2.34 (from RM2.39 previously) as we roll forward our valuation base year. We maintain our Add call on the stock, with new power plant bids and a turnaround of its WiMax division as potential re-rating catalysts.
1Q15 results review
YTL Power's 1Q15 revenue fell 5.6% due to a 24% decline in Power Seraya's revenue as fewer units of electricity were sold while prices from retail contracts were lower. Furthermore, fuel oil trading during the quarter recorded lower revenue and profit. Both the Malaysian IPP and Wessex Water cushioned the decline somewhat, with revenues growing 11% and 9.3%, respectively. YTL Power's overall PBT improved 21.5% as earnings from its Malaysian IPP, Wessex Water and forex gains in its investment-holding division cushioned the weak Power Seraya earnings. We note that its WiMax division continues to generate losses at the PBT level, coming in at RM77.9m in 1Q15 (from RM49.8m losses in 1Q14).
WiMax continues to make losses
YTL Power's WiMax division losses widened in 1Q15 as revenues declined from RM217.8m in 1Q14 to RM148.1m in 1Q15. The main reason for the decline in revenue was lower contribution from project sales during the quarter. While we are disappointed by the division’s widening losses, we have already imputed WiMax losses for FY15 and we expect the division to break even by FY16.
Lower target price as Malaysian IPP expiring
Our SOP-based target price on the stock is reduced to RM2.34 as we roll forward our valuation base year to FY15. The reduction in our target price is based on the value of its Malaysian IPP business, which expires by 3QCY15. We maintain our Add call on the stock.
Source: CIMB Daybreak - 21 November 2014
Target RM2.34 (Stock Rating: ADD)
YTL Power's 1Q15 core net profit of RM243.8m was in line with our and consensus estimates, accounting for 24% of our full-year forecast. While revenues declined yoy to RM3.36bn (from RM3.98bn in 1Q14), earnings rose 3.8% yoy due to forex gains in its investment-holding division. No dividends were declared during the quarter, which was expected. We make no changes to our earnings forecasts while our SOP-based target price is reduced to RM2.34 (from RM2.39 previously) as we roll forward our valuation base year. We maintain our Add call on the stock, with new power plant bids and a turnaround of its WiMax division as potential re-rating catalysts.
1Q15 results review
YTL Power's 1Q15 revenue fell 5.6% due to a 24% decline in Power Seraya's revenue as fewer units of electricity were sold while prices from retail contracts were lower. Furthermore, fuel oil trading during the quarter recorded lower revenue and profit. Both the Malaysian IPP and Wessex Water cushioned the decline somewhat, with revenues growing 11% and 9.3%, respectively. YTL Power's overall PBT improved 21.5% as earnings from its Malaysian IPP, Wessex Water and forex gains in its investment-holding division cushioned the weak Power Seraya earnings. We note that its WiMax division continues to generate losses at the PBT level, coming in at RM77.9m in 1Q15 (from RM49.8m losses in 1Q14).
WiMax continues to make losses
YTL Power's WiMax division losses widened in 1Q15 as revenues declined from RM217.8m in 1Q14 to RM148.1m in 1Q15. The main reason for the decline in revenue was lower contribution from project sales during the quarter. While we are disappointed by the division’s widening losses, we have already imputed WiMax losses for FY15 and we expect the division to break even by FY16.
Lower target price as Malaysian IPP expiring
Our SOP-based target price on the stock is reduced to RM2.34 as we roll forward our valuation base year to FY15. The reduction in our target price is based on the value of its Malaysian IPP business, which expires by 3QCY15. We maintain our Add call on the stock.
Source: CIMB Daybreak - 21 November 2014
