RHB cuts YTL Power target price to RM1.50

by **Cals** Tue 19 Mar 2013, 17:07

RHB cuts YTL Power target price to RM1.50
Business & Markets 2013
Written by Charlotte Chong of theedgemalaysia.com
Tuesday, 19 March 2013 16:37

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KUALA LUMPUR (MAR 19): RHB Research Institute Sdn Bhd has cut the target price (TP) of YTL POWER INTERNATIONAL BHD [] to RM1.50 from RM1.52.

In a Tuesday note, RHB Research said it is maintaining a "neutral" rating on the company but lowering its TP on the back of headwinds that YTL’s Singapore operations may face and the continued losses at WiMAX division.

After a recent meeting with YTL Power’s management, RHB Research said that the management of YTL Power conceded that its Power Seraya operation would likely see more pricing competition in the medium term.

As Singapore’s local authorities are targeting an additional 3,000 MW in generation capacity by 2017, RHB Research believes that tariff pricing may “remain stagnant and even face some downside risks in the near term”.

YTL Power’s unit, WiMAX, registered pre-tax losses of RM137.7 million in first half of financial year 2013.

However, the research house expects the division to break even at the earnings before interest, taxes, depreciation and amortisation level by end of 2015.

Meanwhile, YTL is looking to participate in the upcoming tender for project 3B called for by the Energy Commission.

The project that comprises a greenfield coal-fired power plant with 2 times 1,000 MW capacity will present an opportunity for the group to replenish its independent power producer earnings base, said RHB Research.

“We believe YTL Power might have to put in a competitive bid to bag the project,” said the research house.

The request for quotation evaluation results is expected to be announced by early April.