On the contrary, I think it is even better if the GBP weakens.

With so much RM in hand now, they can settle the debts faster haha

That's their subsidiary which they buy back to maybe close or use it's name for other purpose.

More interestingly, Temasek is now starting to sell it's 3rd power company, Seraya Power. Google it for the news. The last time YTLPOWER was selected as a finalist for the bidding but lost to Marubeni of Japan.

They might try again for this 3rd and last utility company to be sold by Temasek in Singapore.

Hmmm possible acquisition in Europe perhaps?? haha I hope so, witht he credit squeeze in Europe, utilities that has to be sold off can be bought by YTLPOWER. Although I haven't read any utility businesses for sale yet in the news.

I hope it comes lower then, so I can top up ^^.

Hard to say, if the buybacks stop for an entire month then we can make that assumption but for now we have to wait and see.

Buybacks also got season one. I realise they normally stop buybacks when they have some sort of announcement. No hard facts, just some observation I made before and maybe due to soon to be dividend announcement or audited financial statements to be released soon. Let's just wait and see.

If you are using OSK, you can select the counter and click 'News', it will display the latest announcement.

Looks like their board proposal is accepted as usual. Nothing surprising here as they have announced this in their quarterly results. Maybe after this we can see more buy backs.

The share distribution is done earlier for this year mate. No more share distribution after this. It was announced when the windfall tax was pressed against them.

This post has been edited by skiddtrader: Oct 17 2008, 09:31 AM

Doesn't mean anything to me. If you valuate in GBP, the company is still worth the same. And I rather valuate it in GBP rather than RM. Currency exchanges will balance out in the end. No need to worry about it because their loans are in GBPs, so they are hedge against the currency. Their earnings are also in GBP and their loan payments are also in GBP. The higher or lower the GBP against the RM is has nothing to do whether or not the company is worth more or not, because in terms of GBP, it is still worth the same.

Ask yourself, if someone in Europe or the world would want to valuate the Wessex Water business, would they valuate it in RM or GBP?

Yes, it is true if the RM appreciates further the profit on accounts will look less. But we have always discounted profit growth with inflation to see the REAL difference. If our RM inflation was 6% last year, profits or rather cash growth should exceed 6% to be considered actually really making money. If not, they are just hanging there or making less money because the inflation actually eroded their earnings.

So in this instance where the RM starts increasing which means a smaler inflation number or even deflation and we don't take that into account, we might sell prematurely because we are just looking directly at the number at face value. But if we have taken account of the rise or fall of the RM, then only we will know for sure if the profit actually registered any significant growth or not.

If we knew the RM appreciated strongly against the GBP, then we can also forecast a lower profit expectation. But if we don't look at this and assume the profit will register another 6-10% growth, we might find ourselves surprise and alarmed by this and sell prematurely because WE thought the business is going down.

For example in Zimbabwe, where inflation is at 1000%, we can see a profit growth of 500% in the accounts. But is the company worth more? Or did the company assets actually shrink if we take the inflation of 1000% into account.

I have to agree with Cheeroy that the Olympics in UK will not cause any rallying of the pound. If you say it is held in Malaysia maybe or Vietnam, but certainly not UK.

But I still don't get why people are concerned about the GBP depreciating against the RM? I mean we've done the calculation that if the GBP weakens, their liabilities would be lowered as well. Meaning their loan payments/financial costs will be lower which translate to more profit. And since their income and payments are in GBP, they both will negate each other when the figures are converted to RM.

With more than RM10 billion in loans in GBP, wouldn't that be much better?

Yes, I have read and am trying to understand this as well. To quote the their 2007 audited annual report;

"iii Group companies

The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

• income and expenses for each income statement are translated at average exchange rates; and

• all resulting exchange differences are recognised as a separate component of equity

On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to shareholders’ equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on disposal.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity on or after 1 July 2006 are treated as assets
and liabilities of the foreign entity and translated at the closing rate. For acquisition of foreign entities completed prior to
1 July 2006, goodwill and fair value adjustments continued to be recorded at the exchange rate at the respective date of
acquisitions."

Assets and liabilities are quoted at exchange rates at the closing rate at the date of the respective balance sheet means on June 30 every year the exchange rate of that day will be taken to convert the assets and liabilities in whatever currency to RM.

The 2nd point is where our concerns are at. I'm not sure how they average it as quarterly earnings are reported and at the end of the financial year will be added up to present the final value. If the averaging is done at every quarter, that means the currency effects down the year will only be affecting later quarterly reports. The earlier ones are considered done deal and will not be further re-calculated to present a 'present' value profit/loss.

You can refer to page 80 of their 2007 audited annual reports.

The unrealise gain is a good thing, not a bad thing. Do not be confused by it's negative number.

And for June 2008, it is not RM6.00, it's actually RM6.5114. You can check this under Bank Negara Malaysia website. I check their previous 3 years reports all follow the BNM website on the last day of June for that year. That's their main reference. Website is here.

From what I can gather, I check the website of BNM and also try to cross reference with profit margins of YTLPower and can't seem to find the expected fall in profits due to foreign exchange differences. I mean the GBP has been depreciating against the RM since September 2007 from a high of RM7 = GBP1. So for the past 3 quarters from Sept 2007 to March 2008 which record one of the lowest exchange rates at RM6.20 = GBP 1, which is a 10% drop, the profit margin still remained healthy.

And it recovered somewhat in June 2008 to RM6.51 before going down again to the present level of RM5.73 to a Pound, which is about 18% drop since the high of RM7.00 per Pound.

So if we tried to calculate a 10% drop in currency = 10% drop in profits, we would be wrong in our calculations. I'm not sure myself how to calculate accurately the risks and effects of the currency will have on their profits. But I do know that I rather a 10% drop in their debts which is denominated in GBP rather than 10% increase in revenue. Simply because the debt is 4 times larger than the their annual revenue. So the gain of the greater debt reduction is better than the smaller gain of profit.

This post has been edited by skiddtrader: Oct 26 2008, 06:58 PM

The time line I stated as an example from July 2007 to March 2008 shows their past 3 quarters where the currency was affected by at least 10%. But their profit margin in those 3 quarters improved every quarter.

1st quarter EPS was 4.61 cents, followed by 2nd quarter 4.82 cents then 3rd quarter was 5.25 cents.

2nd quarter earnings improved by 4.5% from 1st quarter, then 3rd quarter improved by 8.9% from 2nd quarter.

Now if you look at the currency exchange the GBP was lowest against the RM in the 3rd quarter where as the 1st quarter was the strongest.

I don't know if the currency exchange rate is directly responsible for such quarterly growth but if you would to compare the lowest exchange quarter which is the 3rd vs. the 1st which had the stronger GBP, while the GBP slided down 10%, the earnings went up by 13.8%. Furthermore, 4th quarter results are almost the same with 3rd quarter when the GBP weaken before climbing back up again to 3rd quarter levels.

1st and 2nd quarter 2008 will most probably show us how affected their profits are with relation to the currency exchange as this quarters has the biggest fluctuation downwards.

Please remember when the GBP strengthens, although revenues will increase, their costs will increase as well. Costs as in financial costs(interest on loans), fixed costs (labour, administration), depreciation of assets etc.

Very unlikely to happen because it is being monopolised by TNB. All IPP are only responsible to generate power and have no rights to transmission.

Unlikely for Singapore and Thailand tap power from us as well because they want to protect their own industry and have their own reserves. But I'm aware of a power plant in Johor and Singapore have some kind of power sharing agreement, whereby they will supply each other with some power in the case of unexpected problems in their operation. But it is not an export or a business, just a mutual pact for assistance.

Furthermore, YTLPOWER bought a piece of that Australia transmission, they didn't actually built the system.

I search around the net for any news and so far none. We'll know once the final bidders are finalised like the last time Senoko sale. Power Seraya assets arent' bad and it's currently being expanded in Jurong.

Yeah, the most profitable power company in SG was the 1st one sold which is Tuas Power and that was sold at USD 4bil, next was the biggest and that was sold for USD 3.5bil. I think this one USD 3 bil or below should be around there. And the fact that the parent company Temasek will also arrange for finances is a bonus.

Yes, Darkknight81 is right, each genco is only able to supply about 30% or so electricity. Only certain sections or area will be liberalise to competition among the gencos, not the entire island. More worrying is that Sembawang Corp once said if it doesn't get any of the 3 being sold, it will built it's own power station.

Well the last to be offered is not the most popular one among the 3. Tuas was the favaourite, Senoko was the biggest and Seraya the last one is just the 'calefare' one to make the trio a party.

Good news that they are bidding, but a bit sian the deal pushed back to next quarter. If the Senoko one doesn't go through, might have another chance at it.

Looks like Hong Kong's CLP is shortlisted. No news about the rest.

http://www.bloomberg.com/apps/news?pid=new...id=aKdJL233bNCU

Hmmm it would seem prudent that YTLPOWER is not offering so much, but then Temasek is not a cash strapped company, so for sure it won't sell below it's expectations. Unlike the desperate Enron which was being liquidated when YTLPOWER bought WW, Temasek is still extremely strong on the cash front.

Comes to question though, should YTL pay more for a good asset or offer less and wait for best buys?