A safe haven for investors even in troubled times
YTL Corp Bhd's share price has performed relatively well despite the current economic turmoil, and since hitting a 52-week low of RM5.20 in mid-September 2008, the company's stock has bucked the general trend to gain about 30%.
The appeal in YTL Corp's stock lies in it having little downside, with the company's aggressive share buyback scheme propping up prices.
In 2008, YTL Corp acquired about 9.1 million of its own shares, which nudged its treasury shares up to 137.3 million. Although YTL Corp had a dividend yield of only 2.7% in FY2008, the prospects of the company handing out higher dividends are good in the longer run, considering its recent acquisitions.
Recently, its 53.3%-owned subsidiary YTL Power International proposed to purchase PowerSeraya Ltd, a Singapore-based power generator owned by the Singapore government's investment arm Temasek Holdings, for RM8.6 billion. The deal should be concluded by February 2009.
PowerSeraya could add on as much as RM76 million to YTL Power's bottom line from FY2010 ending June 30. This figure could also increase as PowerSeraya is building two 379mw combined cycle gas turbines that should be operational by 2010. This will increase its capacity by 24.4%. At present, more than 70% of YTL Corp's profits are from YTL Power. So, YTL Power's improved performance will be reflected in YTL Corp.
In addition to the growing operations of YTL Power, YTL Corp is sitting on fixed deposits of some RM12.5 billion and trade and other receivables of some RM2.2 billion. This is enough for it to continue to stay on its asset acquisition trail. The cash works out to some RM7.80 per share but this does not take into account the company's debts.
Another strength of the company is its management, headed by Tan Sri Francis Yeoh and the patriarch of the family Tan Sri Yeoh Tiong Lay. The duo have built the company over the years from a concern largely dependent on power generation into an asset-rich entity. Investors looking for a safe haven even in the worst of times can look to YTL Corp.
