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

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

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.

I think the way you wrote it sounded as though you thought that distributing back as dividend increases the EPS as well. But since you've already clarified the increase as EPS as a different scenario then you are right.

FYI past share dividends are 1 share for every 25 shares held. So it's a 4% tax free dividend.

That's a wrong assumption. YTLPOWER did in fact bought back shares even when the price spiked after the WB pricing was announced. They bought about 6.5 million shares after the price was pushed up.

Because the company buy the shares on a staggered basis throughout the year, it will more or less average itself out by the end of it. No one and not even this company knows the future and can predict a bottom.

But 6.5 million shares out of the 170 million bought so far since last year is considered small and they still have about 4 months of buying left to accumulate enough for share dividend.

This post has been edited by skiddtrader: Aug 6 2008, 04:21 PM

Hard to say. What makes you say TATA will get it and not Mitsubishi or even YTLPOWER?

As I've commented on the Stock Market thread. YTLPOWER will not be privatised.

Reason being, although YTLPOWER is a steady income earner, it would be more profitable if it stays public company because it can raise capital much more easier. And raising capital from new shares issue is much more cheaper than taking a loan from a bank.

As long as it can still raise capital, it can always expand.

YTLPOWER is supposed to be a dividend stock. It does not go up and down so much unless something happen lke the windfall tax on IPP.

You can slowly accumulate also no harm if your goal is for long term investment. But if you are hoping for a sudden uptrend, I highly doubt it will happen this year unless they can be exempted from the windfall tax or win the bid for Senoko Power.

But if you think the price will jump in near future, it's better to buy the WB warrants instead.

This post has been edited by skiddtrader: Aug 18 2008, 02:04 AM

YTLPOWER DISTRIBUTE TREASURY SHARES.


Distribution of One (1) treasury share for every Forty (40) existing ordinary shares of RM0.50 each held in the Company ("Share Dividend")


Ok this although a good thing seem to come a bit early as usually past few years the distribution is in December and normally 1:25 or 4%.

The 1:40 distribution means only 2.5% dividend.

Ex-date is 09/09/2008.

Edit: After reading the quarterly report another additional cash dividend of 7.5% is recommended for approval by shareholders for year ending 30th June 2008. Cash equivalent of RM0.0375 per share or at current markets 2.2% cash dividend.

So total is about 4.7% including share and cash dividend at current market prices.

This post has been edited by skiddtrader: Aug 19 2008, 08:05 PM

huh? I don't get how you can have 35 mother shares when you say you have 350 x 100, that would be 35000 mother shares right?

Just take the total shares you have divide it by 40 and you will get the sum of shares which will be distributed to you. If you want to make it so you get a round number, you can either buy more mother shares or convert the warrants if you want to. In my opinion more worth it to buy the mother shares from the market as the warrants are at a premium now because of the drop in the mother share price.

If you have 35000 mother shares (350 x 100 lots) then you will get 875 dividend shares or about 8.75 lots.
(1 lot = 100 shares)

Edit: This kind of dividend will always make your share having some odd numbers. If you are a long-term investors, it doesn't really matter because the dividends are calculated per share basis. So whether you have 500 shares or 537 shares, it doesn't matter.

But if you are a trader and don't want to have this kind of odd lots in your CDS, you can try to buy more shares to even up the number so when the dividend share is paid, you will have accurate 'lots' that can be sold.



This post has been edited by skiddtrader: Aug 19 2008, 08:49 PM

Well we have that confusion in what lots = ? even before this sub-forum was created. But the standard is 1 lot = 100 shares. Of course some remisiers and brokers have their own definitions.

So always remember 1 lot = 100 shares

As far as I know the share dividend after distribution will only deflate the share price by a bit so the warrants will also suffer slight drop but normally after cash dividend issue, warrant exercise price would be adjusted and so far no details of it has been announced.

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Added on August 19, 2008, 9:24 pmYup that could happen as well, but warrant strike price adjustments are considered and will probably be announced later.

This post has been edited by skiddtrader: Aug 19 2008, 09:24 PM

The cash dividend for this quarter is only 3.75 cents or RM0.0375 per share.

The windfall tax is going to shave off a good 10% of it's yearly nett profits as the estimated tax is around RM90 - 120 million.

According to The Edge Daily, YTLPOWER already paid the tax but never released the information how much they paid.

I'm using OSK and it's automatically 0.6%. Maybe I talk very nicely to my brokers and flirt with them a bit. haha

Haha why don't you try flirting with him although he is a guy, you'd never know...

So OT liau

Cheeroy,

You were right about the bond thing with YTLPOWER and I was originally right about the warrant strike price bringing in the money.

I re-read the report and found that I missed the RM2.2 bil in bonds they issued at the same time the warrants was issued. And tally with their liability and asset went up together. Liability in terms of bonds and asset in terms of cash.

Warrant strike price is still to be their future capital as and when it is fully converted. Like we discussed earlier, booking their capital for the future.

Just FYI.

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Added on August 24, 2008, 12:53 pmNot really, that was expected as a 1 off gain.

Windfall Tax was the un-expected thing. So far I haven't found any source or article pointing to how much they actually paid for their 1st windfall installment.





This post has been edited by skiddtrader: Aug 24 2008, 12:53 PM

[quote=darkknight81,Aug 24 2008, 07:29 PM]

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Added on August 24, 2008, 12:53 pm
Not really, that was expected as a 1 off gain.

Windfall Tax was the un-expected thing. So far I haven't found any source or article pointing to how much they actually paid for their 1st windfall installment.

[/quote]

http://biz.thestar.com.my/news/story.asp?f...17&sec=business

I say so base on this article. Pls go through and give your comment on this

[/quote]


Thanks for the link. Yeah that was the estimated amount of tax that is to be paid. I've seen values from RM90 mil to RM130 for YTLPOWER, so far this article provided the lowest estimated tax needed to pay. If I'm not mistaken, payments are every month so for 1 year, there are 12 payments.

A rough estimation can be made on how much they are suppose to pay base on their 1st month payments which I multiplied by 12 months to get the total tax needed to pay.

The 1st installment payments are highlighted in this article in here.

http://www.bloomberg.com/apps/news?pid=206...4yQs&refer=asia

Latest news about the possible acquisition by YTLPOWER.

YTLPOWER did not win the bid for Senoko Power.

SENOKO POWER SOLD

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Added on September 6, 2008, 2:01 amYup, that's true. As the profits from WW is in pounds, and RM weakening might actually boosts profits. But keep in mind that their debts in Pounds would also increase.

This post has been edited by skiddtrader: Sep 6 2008, 02:02 AM

I'm with Repcoyeoh on the acquisition. Companies like YTLPOWER are concentrated on utilities have no room to grow domestically. The only way up in this country is out of the country. Foreign acquisitions of profitable companies like WW can immediately jack up the price of their shares as well as the value it represents. Higher revenues with higher profit margins means higher dividends.

Unless the mother company YTL sells some acquired water projects in China to YTLPOWER, they would have to scout diligently for a new acquisition. Singapore still has 1 more acquisition target they can try for which is Power Seraya which is next in line to be sold by Temasek Holdings.