YTL Corporation : 1QFY09 : No surprises

December 1, 2008 at 7:13 am Leave a comment

• Revenue up y-o-y
YTL posted 1Q09 revenue of RM1.74bn (+9.9% y-o-y, -7.9% q-o-q). The y-o-y increase in revenue was driven by the construction, information technology and cement manufacturing and trading sectors.
• Profits higher due to revaluations
The group’s 1Q09 profit (+30.1% y-o-y, +19.8% q-o-q) was substantially higher due to a fair value gain on investment properties this quarter.
• Improved performance in most sectors
The group posted better y-o-y revenue in the construction, information technology and cement manufacturing and trading sectors, but posted significantly lower revenue for the property investment and development sector.
Going forward, despite the removal of cement import duty recently, we do not expect domestic cement price to adjust downwards significantly as it is already at competitive levels vis-à-vis regional prices. The recent RM7bn fiscal stimulus under the government’s economic stabilisation plan is positive for the cement sector as RM4.1bn of the allocation will go towards infrastructure expenditure such as schools and roads.
The impact of the windfall tax on YTL Power is no longer an issue for the company, as it would now only have to make a one-off payment to the government and there would be no renegotiations of its power purchase agreement (PPA) with Tenaga.
• Maintain call and TP
The Group’s consolidated warchest of RM12bn puts it in good stead to acquire distressed assets in prevailing market and economic conditions, moves it has done with fair amount of success in recent past (case in point, Wessex Water). We continue to favour the Group for its stability and attractive dividend yields, and reiterate our call and TP.

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YTL Power International : 1QFY09 : Within expectations YTL Cement : 1QFY09 : Within expectations

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