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Land-banking

Rational unknown

The intention behind YTLP’s proposed acquisition of a sizable plantation estate is unknown given the lack of disclosure. Nevertheless, the YTL group generally has a penchant for acquiring assets at attractive prices. Housing generation assets is a possibility, in our view. Maintain HOLD with an unchanged SOP-based TP of MYR0.70. In the power space, we prefer Tenaga (TNB MK, BUY, CP: MYR9.90, TP: MYR12.00).

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Acquiring land in Kulai, Johor

YTLP, via its subsidiary SIPP Power, is proposing to acquire 664 ha of oil palm estate in Kulai, Johor from Boustead Plantation (BPLANT MK, BUY, CP: MYR0.59, TP: MYR0.90) for MYR429m (or MYR6psf). YTLP has not made an announcement to the stock exchange regarding this transaction, thus its intention for the transaction is unknown at the time of writing. Nevertheless, with a cash pile of >MYR10b as at Jun 2021, the acquisition would have little impact on YTLP’s balance sheet health (+3.3ppt to FY22E gearing), and dividend-paying capability, in our view.

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Suited for housing generation assets

In our view, the land is suited for housing electricity generation assets, given its 1) size (sufficient to house c.400MW of solar capacity) and 2) proximity to both the state capital Johor Bahru (a major load centre) and neighbouring Singapore (possible power exports). Recall YTLP no longer has any electricity exposure in Malaysia with the recent expiry of its concession. The old plant was previously situated on leased land.

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Maintain HOLD

Our FY22/23/24 net profit forecasts and our MYR0.70 TP (based on a sum-of-parts, with the operating entities each valued by DCF) are unchanged, pending deal completion and management updates. YTLP’s
earnings could recover meaningfully upon the eventual commissioning of Attarat Power.