Saturday, 11 February 2017

Stock Review – YTLPOWR(6742) (YTL POWER INTERNATIONAL BERHAD)

Bursa Malaysia - 6742
Bloomberg - YTLP:MK
Yahoo - 6742 .kl

Webpage - http://www.ytl.com/


Company Profile

YTLPOWR had three business segments as follows:
1)   Multi Utilities Business (Merchant) – 55.0% of 2016 revenue
2)   Water and Sewerage – 32.4% of 2016 revenue
3)   Mobile Broadband Network – 6.8% of 2016 revenue

1) Multi Utilities Business (Merchant)

55.0% of YTLPOWR revenue come from these segments. YTLPOWR operated 3,100 MW of installed capacity comprised of steam turbine plants, combined cycle plants and co-generation combined cycled plant in Singapore. Besides selling electricity, YTLPOWR able to receive additional incomes from the sales of the by-product of the plants; steams and portable water. There are more new entries of electricity retailers in Singapore had make the retail electricity sector very competitive.

YTLPOWR power purchased agreement in Malaysia had completed in September 2015 and now only awarded project to supply power from Paka Power Station on short term basic.

Besides Singapore and Malaysia, YTLPOWR also owned partial of power plant company in Indonesia and Austrialia.

YTLPOWR had two power plant in the development stage and had power purchase agreement for over 30 years after completion of projects. The two projects are 2 x 660MW coal plant in Indonesia and 554 MW oil shale-fired plant in Jordon. The Jordan plant is planning to operate in 2017.

PROS:
è Able to sells the by-product of the plants to provide addition income to YTLPOWR.
è YTLPOWR is developing 2 power plants which will provide income stream for the next thirty years if completed.

CONS:
è  Addition new entries of electricity retailers to Singapore had make the retail electricity sector very competitive.
è Power purchased agreement in Malaysia had competed in September 2015

2) Water & Sewerage

YTLPOWR had a wholly owned subsidiary, Wessex Water Limited, operate water & sewerage business in UK. Wessex Water Limited serving 2.8 million users in southwest, England. In 1 April 2015, Wessel Water’s regulator (Ofwat) implement price controlled for the water supply until 2020. Wassex Water Limitted also having assistance programme to support customer who are financially vulnerable.

CONS:
è  Price controlled had implemented for five years from 1 April 2015. This might reduce the profit margin for Wessex Water Limited
è Provide assistance programme to support customer who are financially vulnerable reduce the revenue


3) Mobile Broadband Network

YTL Communication Sdn Bhd, 60% owned by YTLPOWR is the first to launched VoLTE (Voice over LTE) in Malaysia in June 2016.



Financial Statement


YTLPOWR had RM 8,077,220,000 Intangible asset or in other word goodwill. Goodwill is recorded when the company use higher cost to purchase another company. Goodwill is review by the management yearly and is impaired when the goodwill is not applicable anymore.

Besides that YTLPOWR had increase in the inventories from RM 440,418 to RM 805,902,000 the increase to the inventories is due to development land of RM 365,281,000 for acquisition of land at Filton Airfield, Bristol.

The receivable, deposits and prepayment had also decrease from RM 2,292,926,000 to RM 1,723,420,000 the decrease of receivable is main due to collection of receivable which had past due as receivable past due had decrease from RM 830,182,000 to 457,217,000.



YTLPOWR had SGD 697,396,258 or RM 2,079,356,683 revolving credit and SGD 757,173,077 or RM 2,257,587,246 unsecure term loan to be paid fully on 14 September 2017. Besides that YTLPOWR has GBP 140,000,000 or RM 754,740,000 unsecured term loan had to paid in full on 15 December 2018. YTLPOWR had many borrowings and bonds in foreign currency. They are USD 600,000,000, GDP 1,799,148,689 and SGD 2,269,987,107.

The post employement benefit obligations has increase from RM 743,365,000 to RM 874,272,000 main due to the increase in defined benefit plan in United Kingdom from RM 734,028,000 to RM 861,832,000.
PROS:

è Account receivable past due had decrease from RM 830,182,000 to RM 457,217,000

CONS:
è RM 8,077,220,000 intangible asset.
è YTLPOWR had huge amount of borrowings and bonds in USB, GDP and SGD.
è YTLPOWR had Define benefit plan for employee in Indonesia and United Kingdom.

Director and Shareholder

YTLPOWR mostly owed by Tan Sri (Dr) Yeoh Tiong Lay and his family. YTL Corporation Bhd owned 47% of YTLPOWR. Tan Sri (Dr) Yeoh Tiong Lay indirectly owed 63% of YTLPOWR.

Warrant

Annual report 2016 shown that there are still 152,792,175 warrant not excise, The warrants can convert into ordinary share of RM 0.50 par value any time between 2008 / 2018.

CONS:
è Once the warrants is excised. The share will be dilute.


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