Is the stock price of Yang Zhongli and Shuangxiong plummeting? Should we really step in? Let's see what the market has to say.
Among them, $YTLPOWR (6742.MY)$Yang Zhongli's electrical utilities profit performance is declining by quarters. Most investment banks believe that its stock price trend will also slow down, and have successively downgraded the stock rating to 'hold' or 'follow the market'.
Galaxy Securities analysts pointed out that due to the quarterly decline in profitability contribution of the Singapore subsidiary, Power Seraya, by 18% in the third quarter of the 2024 fiscal year (ending in March), coupled with the expanded losses in the telecommunications business, the net profit of Yang Zhongli's electrical utilities in the third quarter also began to decline from its peak, dropping 16% quarter-on-quarter.
"Power Seraya's net profit performance began to return to normal in the third quarter, while the telecommunications business faced the impact of declining project revenue and widened losses, enough to offset the narrowing losses of Wessex Water Affairs Company, as well as the more profitable contributions from Lianhao Company."
The analyst also mentioned that Power Seraya's electricity retail profit margin decreased quarterly due to supply contract renewals, offsetting the higher electricity sales volume brought by hot weather in the third quarter.
Regarding the outlook, the analyst has not changed the future profit expectations for Yang Zhongli's electrical utilities, still predicting that Power Seraya's profits will continue to fall back to normal levels. However, with the recovery of Wessex Water Affairs performance and the contribution of the datacenter business starting from the second half of the 2025 financial year, it is expected to mitigate the impact of the decline in Singapore's power generation profits.
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