Monday, December 8, 2014

YTLPOWR 1Q15 EPS +8% YoY



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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