About YTL Power ...

Its Prospects ...

Expect YES WiMAX business to continue to drag on its earnings going forward. This will be cushioned partly by positive earnings contribution from its PowerSeraya Ltd independent power producer and Wessex Water.

Given YTL Power failed to get extensions to its concessions, its decision on a lower dividend payout was to prepare the group with the necessary cash hoard for it business ventures, YES WiMAX and the Jordan oil share project, or the potential M&A if there are bargains to be found.

There are a few potential M&A candidates – water companies in the UK and power concessions in Indonesia– for YTL Power to explore.

YTL Power via its subsidiary YTL Comm has been awarded a 1 Bestarinet project worth rm4.5 billion. The contract is for a five year period, with an option to extend another five plus five years totaling 15 years. The project involves providing internet access and a virtual learning platform for 9924 schools starting Jan 2012.

The project will not be earnings accretive in the near term, but expect it to enhance YTL Comm’s profitability over the longer term via larger recurring revenues arising from a growing subscriber base as YES brand awareness improves.

However, expect YES WiMAX will continue to be a drag on YTL Power’s earnings for the next three years during its gestation period.

The feasibility study of the project is yet to be completed. It will be a long wait before this business venture will take off.

YTL Comm is 60% controlled by YTL Power Intl Bhd.

Both YTL and Asiaspace have already received their allotment in principal of the LTE/4G spectrum from MCMC.

Privatization Of YTL Power/YTL Land/YTL E-Solutions !!!

The privatisation, vide share swap of YTL Power, YTL Landand YTL E-Solutions, is possible. Hypothetically, if YTL can successfully collapse the minority “leakages” of its listed subsidiaries, the enlarged YTL may morph into a significant concession-based entity with room to pay out generous dividends.

YTL will have access to more than RM700mil free cash flow, in the absence of cash flow leakages to minority interests. This suggests that there is an upside to dividend per share (DPS).

The acquisition of YTL Cement may cause YTL’s major shareholder to also collapse the minority interests in its other listed assets.

The privatisation of YTL Cement was a win-win proposition for both YTL and YTL Cement. YTL benefited from a 6% earnings lift; increased in free float and trading liquidity; and increased in YTL’s ability to pay higher dividends.

YTL Cement was delisted as YTL acquired more than 90% of its outstanding shares.

The acquisition of YTL Cement was value enhancing for YTL given the lower price earnings ratio (PER) acquisition price tag in comparison with YTL.