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Ultraboom commented on a stock · 22 hours ago

Q4FY24 and overall FY24 performance

Overall FY24 performance was satisfactory esp compared to FY23, i will focus on Q4FY24, note if u have no idea / dont understand any of what im about to say, i would suggest you go read up / learn yourselves, you should only invest in what you understand / confident, not cos its going up, someone told u can buy or sell side analyst says this stock will go up
1. power generation - as expected Q4 revenue and profit from power seraya was lower due to lower pool prices, as shown in its peer Sembcorp power business came down 26% yoy, revenue for ytl power seraya came down 6% yoy but profits are up 50% yoy due to lower interest payment and strengethening of SGD against MYR (note that this was before the recent MYR strengthening)
moving forward i expect the forex gains to go down with recent strengthening of MYR against SGD, but still expect YTL power seraya to contribute robust earnings, but maybe not as much as in FY23, but upcoming catalyst with 600MW CCGT power plant that will be online by end of 2027. There will also be a large scale solar power farm with 500MW capacity to power their data center, but this is still in developement, will watch this space closely
2. water and sewarage - as expected, wessex posted its first profit making quarter since Q1FY23, thanks to cooling inflation in the UK and recent water tariff hike in april 2024, and also lower interest expense on index linked bonds, myr depreciation also helped to add profits this QR, moving forward as long as the inflation in UK doesnt heat up too badly, wessex should be able to make small profit but risks lies in weak draft determination by Ofwat which might reduce water tariff moving forward causing wessex to be loss making, this is a field that i personally need to study more, will monitor this space
3. telecommunications - this is the wild card, i didnt expect YTLC to make a profit this quarter, they've been loss making since YTL acquired them in 2014, a small profit of 37.4m this quarter, moving forward if they can sustain the profits, it might not drag down the earnings as much as currently, they are worst performing segment with nett loss of 223m for FY24, down from 268m in FY23.
however do note that YTLC will be the only telco operator left in DNB, as other 4 telcos have moved on to the 2nd 5g network, from the way i understand our 5g network model, capex cost might increase as its only beared by YTLC instead of shared with other telcos that have moved on, upside being that YTLC might venture into new segments other than the ultra competitive, low margin consumer telco business
Q4FY24 and overall FY24 performance
4. investment holdings - IMHO the investment holdings are the GOAT for FY24 as they more than double the profits vs FY23 via jordan and java power, with acquisition of ranhill, i expect earnings to be robust moving forward, esp once the AI data center starts to contribute significant earnings to this segment
Valuation - with the recent dump in share price, its interesting that market has not valued YTLP as its historical high of 12x earnings, esp with its robust earings and good prospects, instead the valuation fell from 10x to 8x as of this writing, maybe market doesnt expect anymore huge growth in the near term? or maybe the euphoria is gone? there are many reasons, your guess is as good as mine, it would be intereting to see how market reacts to QR tmr
Debt levels - there are many concerns on YTLP high debt levels (esp from novice investors), but do note that this is a utility business, its stable and predicatable hence the use of debt to finance capex, but i do give management kudos as the debt level has been managed very well, short term debt has been reduced from 4b to 2b, based on cashflow statement, I assume most were converted into long term debt which wont hurt cashflows as badly moving forward, most of the long term debts are in the form of bonds denominated in GBP ( which if u recall is the index linked bond held in wessex water)
dividends - a lot of novice investors/ speculators also complain about the low dividend received relative to the share price, reason is simple, utility is a capex intensive business, most of the money is needed to reinvest in the business in order to grow it, and as long as management has shown to be able to deliver good results (which imo they have), i dont have an issue with this, DPS for FY24 is 7sens vs FY23 6 sens, so it did increase , though 1 would argue that EPS went from 25 to 42.6, a 70% increase but dividends only increased 16% i would argue that the massive increase in share price more than made up for it, this stock wont give u the 3-4% dividend you want (likely 1-2% yield), but the increase in share price should make up for it, assuming u bought it at a decent valuation
in conclusion, results were within or slightly above expectation, the YES 5G business making profit was a surprise, i personally own this counter as part of my portfolio cos i wanted exposure in utility business, i understand it wont give me the highet growth but it will be robust due to defensive nature of utility business, the growth was unexpected in the last 2 years, so u can say i got lucky in my pick. I wont talk about their data center business as more clarity is needed on this
All these are just my limited analysis, feel free to add more below, pls no asking about buy or sell
Q4FY24 and overall FY24 performance
Q4FY24 and overall FY24 performance
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Ultraboom
Just a normie humble value investor, I'm not the smartest or fastest. Aiming for consistent decent returns 15-20% PA
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