Stock Name: YTLPOWR
Company Name: YTL POWER INTERNATIONAL BHD
Research House: RHB
YTL Power International Bhd
(March 21, RM2.29)
Maintain market perform at RM2.31 with fair value at RM2.57: YTL Communications finally unveiled two new Yes devices early this month ' the Samsung Buzz mobile phone and the Zoom router. Our initial impressions of the Buzz are less than favourable mainly due to: 1) smaller than-average screen size; 2) lack of applications; 3) keypad being too small; and 4) a not-so-friendly user interface. We welcome the news that YTL Comms plans to launch Android smartphones in June, given their rising popularity.
The new Valuepacks offer competitive rates for heavy data users, as not only do they enjoy bigger savings, they also receive free voice calls and SMS to any mobile number.
However, for mobility, we believe the fact that a user must use the Samsung Buzz to enjoy the free voice minutes and SMS is a serious dampener. Otherwise, you need to login using a Yes ID to a non-handset device (such as a desktop or laptop) to utilise the freebies. However, this means a lack of convenience and/or mobility.
We are somewhat concerned with YTL Power's lower-than-expected second interim single tier dividend per share (DPS) of 1.875 sen (we had forecast 3.75 sen).
After further discussions with its management, we were still unable to get a clear sense of the level of future dividend payouts.
Preferring to remain conservative, we have cut our FY11 DPS forecast from 13.1 sen to 9.4 sen. Thus, we only expect YTL Power to subsequently declare a third interim and final dividend of only 1.875 sen/share each. We believe management is looking to conserve cash, as YTL Comms plans to spend more to boost coverage.
The risks include: 1) unfavourable forex movements, which will adversely affect the translation of foreign earnings; 2) potential change in competitive landscape under the National Energy Plan; and 3) execution risk and poor subscriber numbers for WiMAX.
We have left our earnings forecasts unchanged.
We have maintained our sum-of-parts-derived fair value on YLT Power at RM2.57. Without the management's assurance regarding future dividends, we believe YTL Power may lose a bit of shine since the key investment thesis for the stock has historically been high dividend yields. For FY11, we now expect YTL Power to only offer a relatively mediocre gross dividend yield of 5.5% (FY10: 7.6%). ' RHB Research, March 21
This article appeared in The Edge Financial Daily, March 22, 2011.
Company Name: YTL POWER INTERNATIONAL BHD
Research House: RHB
YTL Power International Bhd
(March 21, RM2.29)
Maintain market perform at RM2.31 with fair value at RM2.57: YTL Communications finally unveiled two new Yes devices early this month ' the Samsung Buzz mobile phone and the Zoom router. Our initial impressions of the Buzz are less than favourable mainly due to: 1) smaller than-average screen size; 2) lack of applications; 3) keypad being too small; and 4) a not-so-friendly user interface. We welcome the news that YTL Comms plans to launch Android smartphones in June, given their rising popularity.
The new Valuepacks offer competitive rates for heavy data users, as not only do they enjoy bigger savings, they also receive free voice calls and SMS to any mobile number.
However, for mobility, we believe the fact that a user must use the Samsung Buzz to enjoy the free voice minutes and SMS is a serious dampener. Otherwise, you need to login using a Yes ID to a non-handset device (such as a desktop or laptop) to utilise the freebies. However, this means a lack of convenience and/or mobility.
We are somewhat concerned with YTL Power's lower-than-expected second interim single tier dividend per share (DPS) of 1.875 sen (we had forecast 3.75 sen).
After further discussions with its management, we were still unable to get a clear sense of the level of future dividend payouts.
Preferring to remain conservative, we have cut our FY11 DPS forecast from 13.1 sen to 9.4 sen. Thus, we only expect YTL Power to subsequently declare a third interim and final dividend of only 1.875 sen/share each. We believe management is looking to conserve cash, as YTL Comms plans to spend more to boost coverage.
The risks include: 1) unfavourable forex movements, which will adversely affect the translation of foreign earnings; 2) potential change in competitive landscape under the National Energy Plan; and 3) execution risk and poor subscriber numbers for WiMAX.
We have left our earnings forecasts unchanged.
We have maintained our sum-of-parts-derived fair value on YLT Power at RM2.57. Without the management's assurance regarding future dividends, we believe YTL Power may lose a bit of shine since the key investment thesis for the stock has historically been high dividend yields. For FY11, we now expect YTL Power to only offer a relatively mediocre gross dividend yield of 5.5% (FY10: 7.6%). ' RHB Research, March 21
This article appeared in The Edge Financial Daily, March 22, 2011.
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