8 Things You Must Know About YTL Corporation Bhd

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On 18 October 2017, Tan Sri Yeoh Tiong Lay passed away peacefully at age 87. He left behind his wife Puan Sri Tan Kai Yong and seven children. All of them are members of the board of directors at YTL Corporation Bhd, one of the largest conglomerates listed on Bursa Malaysia. As I write, it is worth RM 12.4 billion in market capitalization. Here, as a tribute to a Malaysian legend, I’ll cover 8 things you need to know about IJM Corporation Bhd before you invest.

#1: Stock Symbol

Ticker Symbol: KLSE: YTL / KLSE: 4677
Market Capitalization: RM 12.4 Billion (28 November 2017)

Share Price: RM 1.18 (28 November 2017)

Industry: Trading & Services

Syariah Compliant: No

#2: The Business

YTL Corporation Bhd derives income from 4 main business divisions. They include:

  1. YTL Power International Bhd (YTL Power)
    YTL Corporation Bhd owns 53.54% stake in YTL Power which is also listed on Bursa Malaysia. YTL Power is a global multi-utility group as it has strategic utility-based assets in Malaysia, Singapore, Indonesia, Australia, and the United Kingdom. In 2017, YTL Power has brought in RM 9.55 billion and RM 913.5 million in sales and profits before tax (PBT). Therefore, it is presently the largest income contributor to YTL Corporation.

  2. YTL Cement
    YTL Corporation has 97.97% stake in YTL Cement. It is the largest ready-mixed concrete player in Malaysia with annual production of 3.5 million cubic meters of concrete. In 2017, YTL Cement has made RM 2.43 billion and RM 220.9 million in sales and PBT. Thus, YTL Cement remains an important contributor of income to the group.

  3. Property Investment & Development
    YTL Corporation has 65.26% stake in YTL Land & Development Bhd, its property development arm which is listed on Bursa Malaysia. It is involved in various projects such as The Fennel at Sentul East, Dahlia, U-Thant Place, Shorefront, and Midfields 2 in Malaysia. It is also involved in the 3 Orchard By-the-Park project in Singapore.

    YTL Corporation has 36.46% stake in Starhill Global Reit, a Reit listed on the SGX. It owns a property portfolio worth S$ 3.14 billion as at 30 June 2017 located in Singapore, Malaysia, Australia, China and Japan. Overall, this division has brought in RM 1.23 billion and RM 385.2 million in sales and PBT in 2017.

  4. Hotel Operations
    YTL Corporation owns 56.90% stake in YTL Hospitality Reit, a Reit listed on Bursa Malaysia. It owns a portfolio of hospitality assets worth RM 3.91 billion as at 30 June 2017 located in Malaysia, Japan and Australia.

    YTL Corporation owns 100% stake in YTL Hotels & Properties Sdn Bhd where it operates a portfolio of hotels in the United Kingdom, Malaysia, Japan and Australia In 2017, this division has contributed RM 967.5 million and RM 100.5 million in sales and PBT to the group.

#3: The Financials

YTL Corporation Bhd has reported decline in both group revenues and shareholders’ earnings over the last 5 years. This is because it has received lower sales and profits from YTL Power and YTL Cement during the period.

Source: Annual Reports of YTL Corporation Bhd

#4: Growth Plans

YTL Power

Bulk of YTL Corporation Bhd’s growth plans arises from YTL Power. They include:

  1. Paka Power Station
    YTL Power has received power purchase agreement (PPA) for the supply of 585 megawatts (MW) of capacity for an increased term of 3 years and 10 months from 2 years and 10 months, commencing on 1 September 2017.

  2. Tanjung Jati Power
    YTL Power is working on its 80%-owned Tanjung Jati A Project, a 2 x 660 MW coal-fired power project in Java, Indonesia which has a PPA of 30 years with PT PLN (Persero), the state-owned electricity firm in Indonesia.

  3. APCO
    YTL Corporation Bhd has increased its stake in Attarat Power Company PSC (APCO) from 30% to 45%. APCO is developing a 554 MW oil shale fired power generation project in Jordan. This project has a PPA of 30 years with an option to be extended to 40 years. It is scheduled to come on-line in 2020.

YTL Land & Development Bhd

On 16 January 2017, YTL Land & Development Bhd has completed its acquisition of the remaining 30% stake in Sentul Raya Sdn Bhd from Keretapi Tanah Melayu Bhd (KTMB) for RM 252.4 million. It is engaged in the Sentul Masterplan which involves the redevelopment and urban regeneration of Sentul, Kuala Lumpur.

YTL Hospitality Reit
On 26 May 2017, YTL Hospitality Reit has entered into a sales and purchasing agreement (SPA) to acquire the Majestic Hotel in Kuala Lumpur for RM 380 million. Upon completion, the hotel will be subleased to its vendor, YTL Majestic Hotel Sdn Bhd under a sublease agreement for a lease period of 15 years with an option to renew the agreement for another 15 years.

#5: Risks

YTL Corporation Bhd is reliant on key concessions for continuity of income, especially from YTL Power. Cancellation, expiration, termination or an event where concessions are renegotiated would negatively impact the financials of YTL Corporation Bhd.

#6: Valuation

As I write, YTL Corporation Bhd is trading at RM 1.18 a share.

In 2017, YTL Corporation Bhd has reported to make 7.74 sen in earnings per share (EPS). Thus, its current P/E Ratio works out to be 15.25.

As at 30 September 2017, YTL Corporation Bhd has reported to have RM 1.43 in net assets a share. Thus, its current P/B Ratio works out to be 0.83.

In 2017, YTL Corporation Bhd has declared and paid out 9.50 sen in dividends per share (DPS). If the conglomerate is able to maintain 9.50 sen in DPS for 2017, its expected dividend yields is 8.05%. YTL Corporation Bhd’s ability to maintain its DPS is greatly dependent on its profitability and its balance sheet strength in the future.

#7: Investors Relation

For further enquiries or to request for additional investment information on YTL Corporation Bhd’s Investors Relation matters, you may contact:
Telephone:
(603) 2142 6633

Website:

http://www.ytl.com/contactus.asp

#8: Major Shareholders

As at 19 September 2017, the substantial shareholders of YTL Corporation Bhd are:

– Yeoh Tiong Lay & Sons Holdings Sdn Bhd: 48.76%

– Employees Provident Fund Board: 6.41%

– Amanah Saham Bumiputera: 2.59%

– Jamaican Gold Ltd: 2.40%

– Tien Sha International Ltd: 2.02%

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Ian Tai

Ian Tai is the founder of Bursaking.com.my, a platform that empowers retail investors to build wealth through ownership of fundamentally solid stocks. It is an essential tool that sifts out stocks that grow profits consistently from a database of over 900+ stocks listed mainly in Malaysia. As a Malaysian with close family ties in Singapore, Ian publishes a series of newsletters on how anyone can invest profitability in both countries.

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