Period 3Q12
Actual vs. Expectations
9M12 net profit of
RM823m came below expectations, accounting for 66% of the street’s FY12E net
profit of RM1.27b and 65% of our RM1.28b.
The biggest drags
were largely fair value losses on quoted investments and unrealized FOREX
losses.
Dividends 0.9375sen (-50% YoY; 0% QoQ) tax exempt dividend
for 3Q12. Implied 9M12 NDPS of 3.75sen only makes up 50% of our FY12E NDPS of
7.45sen (4.5% yield).
Key Results Highlights
YoY, 9M12 net profit
was 5% lower due to the reasons mentioned above. However, the decline was muted
by Seraya’s higher volume sold and Malaysian IPP’s higher generation, improved
gas supply and lower O&M cost.
QoQ, 3Q12 net profit
dipped 16% to RM263m due to Malaysian IPP higher depreciation charges and Seraya’s
higher maintenance cost.
Positively, YES
performance has improved significantly from winning the Bestarinet contract; the
segment’s revenue growing 13.0x to RM125m and pre-tax losses narrowing to RM17m
(3Q11: RM76m).
Outlook We
expect YES to continue narrowing its start-up losses assuming the reported (The
Edge) Bestarinet contract (RM300m p.a.) win for 5 years (option to renew for
another 10 years). But this may only be sufficient to cover its plant up cost
as it was reported that YES needs to complete 10,000 base stations forthe
school (1,600 out of current 2,500 are in schools).
Change to Forecasts
No material changes
to our FY12E earnings of RM1.28b while we have lowered YES’ start-up losses, as
we stepped up cost assumptions for Seraya and Malaysian IPPs. We maintain FY13E
earnings pending clarity on the future CAPEX requirements of YES.
However, we lower our
FY12-13E NDPS by 25% each to 6.0sen (3.6% yield), using record low net payout of
33%-34% as we believe YTLPOWR is hoarding cash for acquisitions.
Rating MAINTAIN MARKET PERFORM
Although dividends yields are unappealing, the stock is
trading at trough levels of FY12-13E PBV of 1.3x-1.2x and PER of
9.4x-9.0x.
The group can
surprise on the upside as we believe they are on an aggressive acquisition
mode.
Valuation Lower
TP to RM1.71 from RM1.82 using lower target FY13E NPDS yield of 3.5%* from
4.6%.
Risks Lower
4Q12 dividends. YES losses continue to widen.
Global economic risks, especially Europe.
Source: Kenanga
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