Awaiting better days
Dismal for now
2QFY22 results were significantly below our/consensus expectations as earnings contracted further from an already low 1QFY22 base due to misses at Power Seraya and the associates. We continue to view riskreward as being favourable on a 12-months horizon, with its attractive dividend yield providing downside support, and earnings likely recovering upon the commissioning of Attarat Power. Maintain BUY with a lower MYR0.67 (-4%) TP (SOP-based).
A significant miss
Excluding forex and fair-value adjustments, YTLP’s 2QFY22 core net profit of MYR21m (-87% YoY, -60% QoQ) brings 1HFY22 core net profit to MYR74m (-68% YoY), just 19%/21% of our/consensus full-year forecasts respectively. The miss relative to our forecasts was due to lower-than-expected contribution from Power Seraya and associates (seemingly Jawa Power). No dividend was declared in the quarter, consistent with past practice.
Mixed segmentals
Relative to our forecasts, Wessex’s pre-tax profit was in line, while mobile pre-tax losses were lower-than-expected. Power Seraya was a miss as pretax earnings contracted sharply QoQ due to fuel cost escalation. Associate income also trended lower QoQ, possibly at Jawa Power. On new projects, management disclosed that Attarat Power is expected to be commissioned in 2022.
Yield support
We lower our FY22/23/24 net profit forecasts by 57%/31%/28% respectively to reflect lower run-rates at Power Seraya (slower pace of recovery) and Jawa Power. Our TP (based on a sum-of-parts, with the
operating entities each valued by DCF) is lowered to MYR0.67, as we reflect zero value for Power Seraya. With the impending inflow from the Electranet disposal, we believe YTLP can comfortably sustain a 5sen DPS.