All sifus there,

Pls write down your wise comment on this stock.

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Added on August 1, 2008, 10:06 pmI think this is one of the potential stock and fundamentally good company.
a) Cash rich
Which mean it can venture oversea or inside malaysia or capital repayment to shareholder
b) Dividend yield is good
c) IPP windfall tax doesn't really affect so much as YTL power venture overseas eg (Uk wessex water treatment), Indonesia and australia power plants.


This post has been edited by darkknight81: Aug 1 2008, 10:06 PM

a) Yeap, it is a cash rich company but it is also carrying a very large debt which is still manageble. It really has to start using it's cash for new acquisitions if it wants to create more company growth.

b) Dividend yield is good as well. 8+% if counting share dividends. But do remember to take the new warrants into consideration, as it can strongly dilute EPS if converted.

c) It does not own or operate power plants in Australia, only having the rights to maintain the distribution or power lines. Indonesian power plants and Australian distribution business still much lower than what it earns from power business in Malaysia. Best asset they have is still Wessex Water earning them more than 70% of their profits.

So far still no news whether this company making any new acquisitions, other than some minor expansion into the water business in China which is expected to bloom in next 10 years.

Money sitting in FD earning interest is not in the best interest of the company as inflation will easily erode the value. It has to start seriously looking for another acquisition to grow the company or face slow devaluation of their cash assets. Though I suspect they will start to look for troubled companies when the current downturn peaks. Just like when they snapped up the offer of Wessex Water from Enron during liquidation of assets.



What I like about the company;
Good dividends
Manageble long term debts
Cash is 3x their short term debts
Stable, predictable income and somewhat recession proof.

What I don't like;
Not doing anything with their pile of cash at the moment
Long Term debts not being cleared fast enough
High tax (windfall tax though crossing my fingers it'll get exempted)
High number of warrants in the market

1) Cash Rich = yeah it looks like its loaded.

2) Dividen yield is about 6.7% so it is better than FD

3) Windfall tax = well according to its website, 70% of its profit is now generated in UK, Indonesia and Australia, so it may be true that it is not so effected.

However based on its share trend and its daddy YTL corp, it looks to be going south. I would be interested in this stock if it is below 1.75 so if can wait for better deal, might as well wait.

Yeah !! agree with you wessex power plant contribute about 70% of the group income. Windfall tax at malaysia will have minor issue on the company.
30% contribute by power asset. But don forget windfall tax only implies for malaysia power plant. YTL power have power plant at australia and indon.

Regarding the errode of EPS. I already calculate for RM 2.40 BEFORE the distribution of warrant B. RM 1.80 already count in the share dilution.

So if price reach RM 1.80 I WILL SAPU

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Added on August 4, 2008, 8:17 amSkidtrader,

think of the good side, cash pile can be good if there are better opportunities arises. Or maybe more dividend

This post has been edited by darkknight81: Aug 4 2008, 08:17 AM

For YTLpower, in term of EPS and PER calculated, bare in mind the huge dilution of its large amount of WA and WB. Don't use before dilution figure to justify.

There are issue of one WB with every 3 owning of YTL power mother share. With EPS of 0.22 sen before issuance of WB. That means EPS is reduce to 0.165. With current price of RM 1.80 PE is around 11. With a lot of cash in hand, ytl can either expand their water business or maybe more dividend. Cash is king


I don think they will simply use their cash for any expensive aquisition

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Added on August 4, 2008, 12:48 pmCherroy,

If i bought one YTL power mother share and one lot of YTL POWER WB = RM 1.85 + RM 0.55 = RM 2.30.

1. Is still cheaper before the issuance of warrant B = RM 2.70
2. If i not mistaken with 3 mother share you can get one warrant B for RM 0.10

Thats y i think the price is good. But of course by considering the EPS and PE.

This post has been edited by darkknight81: Aug 4 2008, 12:48 PM

"With a lot of cash in hand, ytl can either expand their water business or maybe more dividend. Cash is king"

I would prefer not to receive that higher dividend which means higher tax.
Another better alternative is to do regular buybacks. Then it is a good thing for the company

If you notice, YTL is currently doing heavy shares buyback.

I noticed as well as we could see them buying back 140 million shares last financial year.
Witht he amount of money they have now, they could do share buybacks for 10 years
Margin is high at 20% - 30%, ROE although low in the beginning, is beginning to go higher.
The only concern now would be its ROE, which has not been very high throughout the years.
And with the warrants and share dividends, the ROE would be maintained at below 20%.

I don't track YTLpower closely, but if before issuance of WB, EPS is 0.22 then you need to take into the account of WA as well which numbers roughly 800 millions of WA, so about 16% more dilution (YTL has outstanding share or roughly 1.5 billins if not mistake, so diluted EPS would be around 19 cents.


1. Prior before they annonced the new WB to be issued at 0.10, YTLPower was hovering aroound 2.20-2.40 level. 2.70 was the price that already after people knew they will issue at 0.10 which already drive up the price.

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Added on August 4, 2008, 3:26 pmIf the YTLPower share price continue to drop further, then buyback programme might not seen as good while reducing the cashflow of the company.
My personally view, if company not going to use the cash then pay back to the shareholders in term of dividend or capital repayment, if the company need the cash for business operation or expansion then fine, no problem.

I don't like the idea company sitting with huge cash pile, doing nothing. If doing nothing, then better give back to the money to the shareholders. As cash sitting in the company, mostly company will put in money market fund of FD which similar to ours ability that we can do as well.

I had posted before the downside of buyback like financial stocks in US, whereas like Citi annonced buyback at 50-60, now facing credit crisis, need to issue new share to raise capital then it issued to near market price around when is was 30. Those buy back resulted a loss of 40-50% to all the shareholders.
Then those money paid for the buyback is indeedly totally wasted.

This post has been edited by cherroy: Aug 4 2008, 03:26 PM

I repeat again, YTLPOWER does NOT own any power plants in Australia. All they have is a distribution concession. Meaning they maintain powerlines and substations.


Regarding buybacks, YTLPOWER distribute all their share buybacks, back to the shareholders as share dividend. They have done this for the past 3 years and doesn't seem to be stopping.


If you think YTLPOWER will rebound after the Windfall Tax issue is resolve, I recommend buying the warrant instead of the mothershare.


Cheeroy, regarding the warrant dilution effect. I was trying to calculate the effect of the dilution of EPS versus the gain in NTA since the cash received from warrants converted will be a form of cash injection for the company. But since the mother company YTL is the majority holder of at least 60% of the WA warrants including the families of Yeoh, it'll be like transferring from one company to another, isn't it?

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Added on August 4, 2008, 4:37 pmDarknight, YTLPOWER's reasoning for such massive warrant issue is not just to pile up cash for fun. They have repeatedly said they are hoarding cash in good times to buy companies in bad times. So an acquisition is expected nowadays because of the recent downturn. Sitting on a pile of cash while earning peanuts from FD is the worst thing a company can do. I only hope and pray they catch another Wessex Water but doubtful anything like that will ever surface again unless there is forced liquidation of American/European companies.

They will use up most of their cash reserve for an acquisition to minimize their loans hence interests accrued. Expectedly another bond issue might occur as well. Don't forget how much YTLPOWER paid for Wessex Water, buying profitable companies is not cheap especially utility assets which has huge debts.

Regarding the share price prior to the WB issuance, it was holding steady around RM2.40. It spiked to RM2.70 when the WB price was announced so that should not be taken into account because it already factored in the WB.


This post has been edited by skiddtrader: Aug 4 2008, 04:37 PM

Yap, after buy back there are few alternatives.

1. share cancellation (less share in the market which means higher EPS)
2. Share bonus issuance

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Added on August 4, 2008, 6:57 pm[quote=skiddtrader,Aug 4 2008, 05:27 PM]
I repeat again, YTLPOWER does NOT own any power plants in Australia. All they have is a distribution concession. Meaning they maintain powerlines and substations.
Regarding buybacks, YTLPOWER distribute all their share buybacks, back to the shareholders as share dividend. They have done this for the past 3 years and doesn't seem to be stopping.
If you think YTLPOWER will rebound after the Windfall Tax issue is resolve, I recommend buying the warrant instead of the mothershare.
Cheeroy, regarding the warrant dilution effect. I was trying to calculate the effect of the dilution of EPS versus the gain in NTA since the cash received from warrants converted will be a form of cash injection for the company. But since the mother company YTL is the majority holder of at least 60% of the WA warrants including the families of Yeoh, it'll be like transferring from one company to another, isn't it?

Ok Yup i am accumulating both mother share (for dividend, or maybe capital repayment (but very low posibility though)
at the same time i also bought Warrant B.

currently i have 30 lots of mother share
but the warrant have smaller quantity only 10 lots as i am worry (if capital repayment happen on ytlpower then ytl power WB will be no value.Agree?)
One more thing i wonder if i got to convert my warrant to mother share (if warrant did not go up - the worst case i mean then i got to convert to mother share) . When can i convert the warratn to mother share? Is it anytime?

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Added on August 4, 2008, 7:04 pm[quote=skiddtrader,Aug 4 2008, 05:27 PM]
I repeat again, YTLPOWER does NOT own any power plants in Australia. All they have is a distribution concession. Meaning they maintain powerlines and substations.
Regarding buybacks, YTLPOWER distribute all their share buybacks, back to the shareholders as share dividend. They have done this for the past 3 years and doesn't seem to be stopping.
If you think YTLPOWER will rebound after the Windfall Tax issue is resolve, I recommend buying the warrant instead of the mothershare.
Cheeroy, regarding the warrant dilution effect. I was trying to calculate the effect of the dilution of EPS versus the gain in NTA since the cash received from warrants converted will be a form of cash injection for the company. But since the mother company YTL is the majority holder of at least 60% of the WA warrants including the families of Yeoh, it'll be like transferring from one company to another, isn't it?

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Added on August 4, 2008, 4:37 pm

Ok Yup i am accumulating both mother share (for dividend, or maybe capital repayment (but very low posibility though as like what you mentioned they want to expand their water business)
at the same time i also bought Warrant B.

currently i have 30 lots of mother share
but the warrant have smaller quantity only 10 lots as i am worry (if capital repayment happen on ytlpower then ytl power WB will be no value.Agree?)
One more thing i wonder if i got to convert my warrant to mother share (if warrant did not go up - the worst case i mean then i got to convert to mother share) . When can i convert the warratn to mother share? Is it anytime?




This post has been edited by darkknight81: Aug 4 2008, 07:04 PM

[quote=darkknight81,Aug 4 2008, 06:48 PM]
Yap, after buy back there are few alternatives.

1. share cancellation (less share in the market which means higher EPS)
2. Share bonus issuance

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Added on August 4, 2008, 6:57 pm[quote=skiddtrader,Aug 4 2008, 05:27 PM]
I repeat again, YTLPOWER does NOT own any power plants in Australia. All they have is a distribution concession. Meaning they maintain powerlines and substations.
Regarding buybacks, YTLPOWER distribute all their share buybacks, back to the shareholders as share dividend. They have done this for the past 3 years and doesn't seem to be stopping.
If you think YTLPOWER will rebound after the Windfall Tax issue is resolve, I recommend buying the warrant instead of the mothershare.
Cheeroy, regarding the warrant dilution effect. I was trying to calculate the effect of the dilution of EPS versus the gain in NTA since the cash received from warrants converted will be a form of cash injection for the company. But since the mother company YTL is the majority holder of at least 60% of the WA warrants including the families of Yeoh, it'll be like transferring from one company to another, isn't it?

Ok Yup i am accumulating both mother share (for dividend, or maybe capital repayment (but very low posibility though)
at the same time i also bought Warrant B.

currently i have 30 lots of mother share
but the warrant have smaller quantity only 10 lots as i am worry (if capital repayment happen on ytlpower then ytl power WB will be no value.Agree?)
One more thing i wonder if i got to convert my warrant to mother share (if warrant did not go up - the worst case i mean then i got to convert to mother share) . When can i convert the warratn to mother share? Is it anytime?

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Added on August 4, 2008, 7:04 pm[quote=skiddtrader,Aug 4 2008, 05:27 PM]
I repeat again, YTLPOWER does NOT own any power plants in Australia. All they have is a distribution concession. Meaning they maintain powerlines and substations.
Regarding buybacks, YTLPOWER distribute all their share buybacks, back to the shareholders as share dividend. They have done this for the past 3 years and doesn't seem to be stopping.
If you think YTLPOWER will rebound after the Windfall Tax issue is resolve, I recommend buying the warrant instead of the mothershare.
Cheeroy, regarding the warrant dilution effect. I was trying to calculate the effect of the dilution of EPS versus the gain in NTA since the cash received from warrants converted will be a form of cash injection for the company. But since the mother company YTL is the majority holder of at least 60% of the WA warrants including the families of Yeoh, it'll be like transferring from one company to another, isn't it?

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Added on August 4, 2008, 4:37 pm

Ok Yup i am accumulating both mother share (for dividend, or maybe capital repayment (but very low posibility though as like what you mentioned they want to expand their water business)
at the same time i also bought Warrant B.

currently i have 30 lots of mother share
but the warrant have smaller quantity only 10 lots as i am worry (if capital repayment happen on ytlpower then ytl power WB will be no value.Agree?)
One more thing i wonder if i got to convert my warrant to mother share (if warrant did not go up - the worst case i mean then i got to convert to mother share) . When can i convert the warratn to mother share? Is it anytime?

[/quote]

Exercising of warrants is anytime.

Thanks Jordy Sifu
Then i think it is ok to buy more Warrant B then

Currently there is a 3 sen discount on the WB, so if you can get it at this price and the price of YTLPOWR rise anymore, then you can exercise for a bigger discount.

I think we can agree that YTL power have strong management. So my strategy for this stock is the mother share keep for long term (for dividend and also price appreciation) . Whereas WB will be good for trading. My view is you can get 100% return for WB once the market rebound.

"My view is you can get 100% return for WB once the market rebound"

I am not so into warrants trading, but your view seems a little doubtful. Yes you might be able to get that return, but for that to happen, YTLPOWR's price "should" increase by RM0.57 as well, based on a 1:1 ratio. Though I am not sure about the delta of YTLPOWR-WB over YTLPOWR, I cannot really comment on its return. But theoretically, if both made a jump of RM0.57, then the ROI on its WB would be greater.

WB will follow the mothershare sen to sen. Since there is no conversion ratio and the conversion price is fixed at RM1.25. So definitely buy the WB if you are aiming for capital gains as the ROI is much better. Mothershare buy for dividends since WB no dividends. So if you buy both, you can offset your loss in WB due to dividend payout by the dividend received in mothershare. WB lasts for 10 years, so no worries on expiry.

I don't think they are going to do any capital repayment, it would be quite controversial if they did that.

For those stock giving high dividend, generally the 'sons' will be discount a bit because of potential reduction in share price due to dividend.

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Added on August 5, 2008, 11:26 amHighly unlikely. Although, YTLPower is a cash rich company, it carries significant of long term debt as well. It is not a totally net cash position to give capital repayment.

This post has been edited by cherroy: Aug 5 2008, 11:26 AM

Oh, thanks for the top cherroy
But, it is still a good opportunity for one to buy its discounted warrants to exercise to mother share?