STOCK FOCUS OF THE DAY
YTLP Power : Paka PPA secured
HOLD
We maintain our HOLD recommendation. Our fair value of
RM1.67/share (from RM1.66/share) is derived from a SOP valuation. This includes
YTLP’s remaining entities being valued on a DCF basis as well. It implies a
forward P/E of 17x, well above its historical average of 12.5x. However, the
stock offers an attractive dividend yield of 7.0%. Tenaga announced it has
signed a new PPA and land lease agreement (LLA) with YTL Power (YTLP). The PPA
is for an extension of 3 years and 10 months on the generation and sale of
electricity from YTL Power’s 585MW combined-cycle gas-fired power plant in
Paka, Terengganu. The scheduled commercial commencement date of the plant is 1
Sep 2017. The new LLA will replace the original LLA dated 1993. It enables YTLP
to lease the land on which the Paka power plant occupies. The LLA extends for
the length of the PPA extension and subsequent demobilisation of the plant.
The impact to YTL Power is positive but minimal. Meanwhile,
it is an earnings neutral event to TNB. Earnings are back loaded till FY21F as
we trim our FY18 net profit by -1.5% as we initially assumed for the Paka power
plant to commence operations by FY18. It factors in an additional year
reflecting the longer term PPA of 3 years and 10 months (vs. 2 years and 10
months previously). We deem lacklustre earnings visibility over its various
operating entities to weigh on YLTP’s growth prospects in the interim.
Other:
Hartalega Holdings : A good wrap to
FY17
HOLD
STOCKS ON RADAR
Oceancash Pacific, Kretam Holdings,Magni-Tech
Industries,Inari Amertron
ECONOMIC HIGHLIGHT
Malaysia : Anticipate OPR to stand pat in next MPC meeting
NEWS HIGHLIGHTS
MAHB : Malaysia Airports said to plan stake sale in Istanbul
airport
AirAsia : AirAsia, Tourism Malaysia team up to promote
tourism
Selangor Dredging : SDB diversifies back into mining
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The information and opinions in this report were prepared by
AmInvestment Bank Bhd. The investments discussed or recommended in this report
may not be suitable for all investors. This report has been prepared for
information purposes only and is not an offer to sell or a solicitation to buy
any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may
from time to time have a position in or with the securities mentioned herein.
Members of the AmBank Group Bhd and their affiliates may provide services to
any company and affiliates of such companies whose securities are mentioned
herein. The information herein was obtained or derived from sources that we
believe are reliable, but while all reasonable care has been taken to ensure
that stated facts are accurate and opinions fair and reasonable, we do not
represent that it is accurate or complete and it should not be relied upon as
such. No liability can be accepted for any loss that may arise from the use of
this report. All opinions and estimates included in this report constitute our
judgment as of this date and are subject to change without notice.
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