KUALA LUMPUR: CIMB Equities Research has a Buy call on YTL POWER INTERNATIONAL BHD [] with a sum-of-parts target price of RM2.80.
It said on Friday, July 8 that YTLP is selling a 43% stake in its unit YTL Jawa Power Holdings to Marubeni Corp for US$224 million or US$1.5 a MW, which is a fair price.
The deal could be positive as the partnership will improve YTLP's chances of clinching other Indonesian power projects.
'However, we cut our FY11-13 core EPS by 2-11% for lower contributions from YTL Jawa and higher WiMax losses. Our SOP-based target is now 2% lower at RM2.80 as cash received from Marubeni does not offset the drop in contributions from YTL Jawa and higher borrowings.
'We also cut FY11-13 net DPS by 31% to reflect a more conservative payout policy,' it said.
YTLP said despite the downgrade in its numbers, YTLP remains a BUY as it believe its share price already reflects the WiMax uncertainties and lower dividends.
It said there could be a re-rating on the back of M&A and positive WiMax developments.
It said on Friday, July 8 that YTLP is selling a 43% stake in its unit YTL Jawa Power Holdings to Marubeni Corp for US$224 million or US$1.5 a MW, which is a fair price.
The deal could be positive as the partnership will improve YTLP's chances of clinching other Indonesian power projects.
'However, we cut our FY11-13 core EPS by 2-11% for lower contributions from YTL Jawa and higher WiMax losses. Our SOP-based target is now 2% lower at RM2.80 as cash received from Marubeni does not offset the drop in contributions from YTL Jawa and higher borrowings.
'We also cut FY11-13 net DPS by 31% to reflect a more conservative payout policy,' it said.
YTLP said despite the downgrade in its numbers, YTLP remains a BUY as it believe its share price already reflects the WiMax uncertainties and lower dividends.
It said there could be a re-rating on the back of M&A and positive WiMax developments.
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