RHB Research has made a “Buy” recommendation for YTL Power International Bhd from its “Neutral” Call with a Trading Price of RM0.68 with a 13% upside.
It said that it maintains its TP at MYR0.68, with the incorporation of a 2% discount, based on our ESG scoring of 2.9. “Note that we have yet to factor in the gains on disposal (MYR0.27/share) in our valuations,” RHB said.
RHB said that it was positive on the disposal ElectraNet, as we believe it is a value-unlocking move to realise its mature investment.” While YTLP will likely record a one-off disposal gain of MYR2.2bn, we decrease our FY22-24F earnings by 1-8%, on the absence of ElectraNet’s earnings,” it said.
YTLP entered into a share purchase agreement with Australian Utilities Pty Ltd or AUP, as a trustee of Australian Utilities Trust, to dispose the entire 33.5% equity stake in ElectraNet and its corresponding shareholder loan notes for AUD1.03bn (MYR3.06billion).
Such sale value represents 4x FY21 P/BV or a AUD767.8m premium over its FY21 net value of AUD258.2million. ElectraNet operates the high voltage electricity transmission system throughout South Australia under a 200-year lease, transmitting power from regional generators and interstate sources over long distances to metropolitan and regional areas including large, directly connected industrial customers.
In addition to its regulated activities, ElectraNet is the owner and operator of an extensive unregulated, contracted portfolio of connection and transmission assets. It generated a net PAT of AUD16.4-24.0m for YTLP in FY19-21. The transaction is expected to be completed by 4QFY22
It said it was positive on the disposal, as it believe it is value unlocking to realise its mature investment. We maintain our TP at MYR0.68, with the incorporation of a 2% discount, based on our ESG scoring of 2.9
