It Is Never Too Boring To Understand Utility: An Introduction To YTL Power Intl Bhd
Most investors feel utility are boring. Basically it is a business that does not grow too fast and requires huge capital expenditure to grow. However, utility companies can be very stable for investors looking for companies with defensive earnings. Today, let us look into one such company listed in Malaysia.
YTL Power International Bhd
YTL Power Intl Bhd (OTCMKTS:YTLPF) is one of the largest independent utility provider listed in Malaysia. The company itself has operations globally but is majority owned by its parent company, YTL Corporation Berhad (KLSE: YTL), also listed in Malaysia.
Malaysia
YTL Power is actually the owner of two gas-fired independent power plant (IPP) in Malaysia, producing a combined output of 1212 MW. The two IPP have a 21 year power purchase agreement with the main electricity company in Malaysia, Tenaga Nasional Bhd (KLSE: TENAGA).
Singapore
In Singapore, it is actually one of the largest power producer in the country, producing about 25% of the total energy required in Singapore. It does it through its subsidiary, PowerSeraya. The company sold more than 10,900GWh in 2013. It also has a trading and fuel management company for vessels in Singapore.
Indonesia
YTL Power has a 20% interest in PT Jawa Power, which owned a 1220MW coal power plant in Java, Indonesia.
Australia
The company also has a 33.5% stake in Electranet, a regulated transmission network service provider down under.
United Kingdom
In UK, the company owned Wessex Water, which is one of the main water and sewerages service company in the UK.
New Growth Area
YTL Power has a 60% interest in YTL Communications. The company is rolling out the Wimax and 4G technology in Malaysia. Already the company is still loss making at the moment, it is expected to be one of the key player in the wireless industry in Malaysia.
Value In Action
There are many segments in the utility industry. However, YTL Power International might be one of the few diversified and global utility company listed in Malaysia. For investors looking at this area for investment, understanding YTL Power might bring them a head start into the wonderful world of utility.
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the problem with this counter is the amount of intangibles compared to equity , should the intangibles get impaired two thirds of equity would get wiped off. Also overall leverage is quite risky.