YTL reported core net profit of RM9m (+>100%yoy) for its 4QFY22, which brought FY22 core earnings to RM69m (+>100%yoy). This is within expectation at 101% of our full-year estimate but ahead of consensus’ RM174m net loss projection.
With the promising result, YTL declared an interim dividend of 3sen/share, which is 20% higher than last year. This implies a reasonably attractive 5.3% yield. Group revenue rose +39%yoy while PBT rose +58%yoy. This was mainly driven by improved performance at the utilities division as Seraya staged a strong comeback from a tighter electricity market in Singapore and partial contribution from Tuaspring from June 2022. This was partly offset by weaker earnings from Wessex Water from temporary cost pressure given a lag in tariff adjustment.
The cement price hike saw the division’s strong underlying PBT growth (+>100%) (excluding RM258m one-off gain on disposal of China cement operations) as the group benefitted from the higher selling prices and volume from the domestic market. Similarly, on a sequential basis, earnings benefitted from an +8%qoq price hike but were partly offset by lower
volumes (-5%qoq).
The groups, hotels showed improved revenue (+38%qoq) and a narrowing in losses sequentially (4QFY22 LBT: RM5m vs. 3QFY22 LBT: RM32m) given the better performance of its hotels and resorts following the easing of movement restrictions in the UK and Malaysia.
While earnings were in-line, MIDF trims its FY23F by – 20% to reflect the downward revision for YTL Power as we now exclude the contribution from its 45%-owned Jordan shale plant. Nonetheless, the research house still expects FY23F earnings to grow +70%yoy driven by stronger Seraya and cement division performance, the latter, in the absence of MCO impact this year.
Despite the earnings cut, MIDF expects YTL’s earnings to further improve in FY23F driven by improved earnings at the utilities division (primarily from Power Seraya), improved cement demand and ASPs and an improving outlook
for the hotel division with the transition to the endemic phase.
Overall MIDF maintains a buy call with SOP-derived TP maintained at RM0.79/share. Dividend yields are reasonably attractive at 5.3% and the stock is trading at a deep 60% discount to FY23F book value.
