Thursday, August 11, 2011

EPF sells 30m YTL Power shares

KUALA LUMPUR: The Employees Provident Fund (EPF), the second largest shareholder of YTL POWER INTERNATIONAL BHD [], disposed of 30.13 million shares from June 30 up to Aug 4.

Filings with Bursa Malaysia showed the EPF's stake was reduced to 729.17 million shares or 10.09% from 759.31 million units or 10.51%. The 30.13 million shares accounted for 0.42%. The share price was trading from RM2.20 to RM1.97 as at Aug 4.

The largest shareholder is YTL Corp with 44.98% or 3.275 billion shares.

Maybank Investment Research said YTL Power was likely to record better than expected 4QFY11 results on reduced fuel cost at PowerSeraya.

'But, with dividends curtailed by its Indonesian expansion plans, widening losses at YES and potential reduction in tariffs at the Paka & Pasir Gudang IPP, its appeal as a high dividend yielding stock is waning. Downgrade to Hold with a reduced TP of RM2.10,' it said in a report on Aug 4.

The research house said it came to understand that the RM681 million cash raised from the 15% stake sale in PT Jawa Power will likely go towards bidding for a 1,000MW coal fired IPP in Indonesia.

'Also, YES is recording average revenue per user (ARPUs) of only RM30, the minimum monthly charge (versus our FY12 assumption of RM49) despite up-selling efforts. With a RM500 million cost base for YES, YTL Power is likely to conserve cash,' it said.

Maybank Research said the government's recently set-up MyPower Corp to review existing power purchase agreements (PPA) is evidence that it is serious about reducing IPP tariffs albeit in exchange for concession extensions.

'We estimate that Paka and Pasir Gudang IPP generate some RM400m in free cash flows (FCF) per annum and easily contributes half of YTLP's dividends. With this FCF source under threat, YTLP is again likely to conserve cash,' it said.

The research house said it maintained its earnings estimates pending 4QFY11 results but slashed its yearly dividend per share forecast from 13.1 sen to 9.4 sen.

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