1. YTL Power International (YTLPOWR)
1Q15 EPS improved 8% to 3.59 sen as net profit increased 12% YoY to RM243.8m. Key driver behind the earnings growth is the
Power Generation (PG) division which saw its PBT +10% YoY to RM66.7m. PG
division benefited from higher generation of electricity sales. Water &
Sewerage (WS) division PBT also +3% to RM200.0m due to increase in price as
allowed by UK regulator.
2. 10 sen dividend likely to
continue in FY15. The 10.0
sen interim single tier dividend has gone ex on 29-Oct-2014. With this dividend
of 10 sen, it is likely that the Company should continue its dividend payment
in FY15 estimated at 10 sen also. Based on its latest share price of RM1.53,
the 10 sen dividend works out to be 6.5% which is among the highest provided by
any counter in FBMKLCI. We think the dividend is likely to continue in the
future due to the very strong cash flow generated by YTLPOWR.
3. Theoretical Target Price of
RM2.00 sen based on 5% target yield. This means 30.7% upside and 6.5% dividend, hence
overall 37.2% total return. The 5% yield is conservative as it is higher than
FBMKLCI yield around 3.0% to 3.5% and is usually the minimum required by
investors for stocks perceived as dividend stock.
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