You got to see the balance sheet of that company also ler my frend. If the company is too aggresive in expanding then owe a lots of debts is also not healthy. Who say cash rich company is waiting for ppl to acquire. As i told you already cash rich does not mean they don know how to take over other company and they are not good. If they are not good how they earn that money? They must wait for the best time to do aquisition which means buying company which is desperate in cash. You must be smart on making full use of your cash in hand ler.. not simply spending like what our government are doing.

In general...According to statistics...Its cash rich company being taken over by someone bigger than them even when they don't have enough cash to acquire.

In general...According to statistics

Mind to share where u get this statistics?

Ya. Its all depends on how much they want to buy and how much they want to sell. I think last time during YTL power acquired WW the size of WW is bigger than YTL power. What i mean is it make more sense for a "Good company with pile of cash in hand to acquire a good business which is selling on discount during market downturn" Like we buying stock also the same, if we buy during market downturn we can acquire more shares which selling at discount.

Can't agree with the statement because it does not make sense.

The benefits of having a large pile of cash is the ability to acquire or buyout any company that offers a good return. Using the cash for not so good deals are really not very convincing of a capable boardroom. Like the recent Maybank acquisition which drew flak from investors.

Like Warren Buffett says, "I rather buy a wonderful company for a fair price than buying a fair company at a wonderful price".

Agree with what you said. Acquisition is similar like we buying stock also. By analysing the company balance sheet, future earnings so on. If you want to buy a business selling at a discount of course it is better to buy when they are desperate to sell. you must value the company like how you value the stock. If not will end up like maybank BII acquistion not only the valuation is high but they not even research fully on the risk involved which made them end up by losing 480 mil..

http://biz.thestar.com.my/marketwatch/buyb...?searchstr=6742

YTL power have massive share buy backs these few days.

Put it this way...A company wouldn't be cash rich if they know where to put their money...

Just to guide into more proper channel of discussion.

There are 2 type of cash rich company.

Type 1
Current asset is cash rich, but so does it long term liability like YTLpower. It is not a real net cash position (after deduct the liability on bond and loan taken up). Taking over it mean although one get the access of the cash but so does its liability.

Type 2
Net cash rich, no debt, cash sitting in company doing nothing.
Normally in this type of company, company has 2 choice, acquisition for business expansion or giving generous dividend (like Panamy, Guiness, JTinter etc).
So those cash won't be sitting too idle for too long as well. Shareholders will get a chunk of it.

It is plain not wise for the board of company directors to see those cash sitting idle for years, normally they will do either newly acquisition or plan in the future (something wait for opportunity) or giving generous dividend if they had no plan to do anything in near future. If the company director board is doing nothing as mentioned, then this is not a good company management already which they don't look after shareholder benefit at all.

Acquisition made normally have lot of consideration, not purely on cash position alone. Even one company is cash rich, but shareholding is quite 'tight' in the hand of the major shareholders, then it won't be possible to get the deal done.

Another point, is that normally people would only interested in to acquire a healthy company, so it means most of the time, those being acquired company should have considerable amount of cash if the company previously was run in a healthy way.
Cashflow is the main ingredient or like blood in the body for company to stay alive.

Thank you Cherroy for your explanation. Do you know the reason behind y Termasek want to dispose all its power asset? First is Tuas second is Senoko and Seraya is the upcoming one.

this discussion is massive complicated......: (

Latest update.. . I just received warrant notice from YTL power. WA conversion price adjusted to RM 1.17 WB conversion price adjusted to RM 1.21.

Saw that cabinet had put a stop on the windfall levy tax on ipp.. good news for Ytlpower...

http://biz.thestar.com.my/news/story.asp?f...10&sec=business

A good news indeed... Haih, disappointed with our flip flop government

Certainly it will not affect YTL Power share price much. As most of YTL POWER income source are from oversea. Actually weakening of pound conversion to RM are the main reason y this counter drop so much. What i concern more is how they are going to use the 8 bil cash in hand...

2012 olympic will be held in UK. So i think the growth in UK for these few years should be shooting up. Pound will be strenghen then...

This post has been edited by darkknight81: Sep 11 2008, 09:05 PM

Currently equities market is quite bearish overall, so those not a major good news won't have much significant effect. Expect some little respond from the market only, which might be short-live.

i strongly beliv the current stock price is quite solid already unless got any bad news on it. As it is utility stock with steady income you cannot expect it to go down further more. It will sustain at this level for quite sometimes though.

What I meant in the previous post is the market won't take that as a major good news (abolish of windfall tax) as a significant factor for stock price upwards movement. My prediction is that it will response a little (up few cents or so), but it can't run away from the market bearish tone currently (don't mean it will go down, just upside potential is capped by the market tone).
This stock usually moves in lesser degree than the market (which usually does for this stock as historical data said it has low beta compared to KLCI)

Awesome news indeed.