YTL Power International Berhad (YTLPOWR) reported a robust performance for FY24, with its core profit reaching RM3.36 billion, in line with expectations, marking a 69% year-over-year increase. The company's revenue also saw a 2% rise, driven by higher revenues across all segments except PowerSeraya, which faced a 6% decline due to lower pool prices. Wessex Water and the telco unit showed significant improvements, with Wessex Water's revenue increasing by 22% following a tariff hike, and the telco unit's revenue growing by 29% due to construction revenue from the Sabah Point of Presence (PoP) project.

Analysts from various broking house have upgraded YTLPOWR to an OUTPERFORM, BUY and ADD rating, reflecting the emergence of value due to recent price weakness. The target price has been adjusted to RM5.20, with an expected continuation of strong earnings in FY25, particularly from the data centre business, which is set to contribute more meaningfully starting from the second half of FY25. The company's 4QFY24 results were buoyed by a 33% quarter-over-quarter increase in core profit to RM925.4 million, largely due to the turnaround of Wessex Water and the telco unit. However, PowerSeraya's earnings continued to decline, dropping by 7% despite higher revenue.

Year-over-year, YTLPOWR's FY24 revenue growth was supported by Wessex Water's tariff hike and new contracts in the non-household retail market, alongside the telco segment's construction revenue. The company's core profit jump of 69% was largely attributed to a 50% surge in PowerSeraya's earnings, bolstered by long-term favourable gas costs. The turnaround in Wessex Water and the telco unit also contributed to the profit growth in 4QFY24.

The company declared a second interim dividend of 4.0 sen per share, totalling a full-year dividend of 7.0 sen, which exceeded projections. Moving forward, YTLPOWR's outlook remains positive, with ongoing developments in its data centre and digital banking ventures expected to drive long-term growth. Despite a reduction in the sum-of-parts-based target price to RM5.20, YTLPOWR's diversified global assets and favourable gas inventory continue to underpin its earnings stability.

Sources: Kenanga, CGS, Maybank, MIDF, RHB
Titles: Value Emerges; Upgrade to OP, A good ending to a record year, Commendable delivery, Surprise from Wessex and Telco Business, A Solid Landing; Keep BUY