YTL 1Q profit down on mobile broadband losses

PETALING JAYA: A RM94.9 million loss from YES mobile broadband business caused YTL Corp Bhd’s earnings for 1Q ended Sept 30, 2011 to decline 9.7% year-on-year (y-o-y). Profit attributed to shareholders came in at RM251.83 million from RM278.9 million after taking in smaller numbers from YTL Power International Bhd.

“This is not unexpected, given the nature of the business and the front-loaded capital outlay required to build our nationwide network,” group managing director Tan Sri Francis Yeoh said in a statement, adding that the business would turn in profit once scale is attained.

Revenue rose marginally to RM4.54 billion from RM4.41 billion, even though performance at cement processing and other utility divisions held up well.

The group said it is in the final stage of ongoing rationalisation of its retail and hospitality division with the acquisitions by Starhill Real Estate Investment Trust (Starhill REIT) of its eight hotels, including the Ritz-Carlton Kuala Lumpur, the Vistana chain of hotels, as well as the Pangkor Laut, Tanjong Jara and Cameron Highlands luxury resorts.

“Internationally, the trust is in the process of completing its acquisition of Hilton Niseko in Japan. In addition, the group completed the restructuring of its property development business on Nov 4,” he said.

Yeoh says the loss from YES is not unexpected due to the heavy capital outlay needed to build a nationwide network.

YTL Power’s net profit fell to RM246.2 million for the quarter compared with RM272.9 million last year. Revenue, however, grew by 4.4% to RM3.64 billion from RM3.48 billion, mainly due to better performance of its merchant multi-utility businesses.

“The group’s established utilities business, comprising power generation and power transmission in Malaysia, Singapore, Indonesia and Australia, water and sewerage services in the United Kingdom and merchant multi-utility businesses in Singapore, continued to perform steadily during the quarter,” the group said in a statement.

Another subsidiary, YTL Cement Bhd, recorded a 4.4% increase in earnings to RM75.8 million for 1QFY12 ending June 30, although revenue rose 17.6% to RM544.7 million (y-o-y).

Property development arm YTL Land & Development Bhd saw a fall in net profit to RM2.9 million for 1QFY12 versus RM3.2 million last year. Revenue declined to RM3.4 million from RM14 million, owing to “timing differences of project launches” and higher operating expenses, it said.

YTL E-Solutions Bhd recorded a RM9 million net profit for 1QFY12, compared with RM2.2 million last year, with revenue doubling to RM20.8 million from RM9.2 million. It attributed growth to the fee income derived from a spectrum sharing agreement in relation to its 2.3 GHz Worldwide Interoperability for Microwave Access spectrum.


This article appeared in The Edge Financial Daily, November 18, 2011.



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HDBSVR: Selling to see KLCI sliding to 1,445

KUALA LUMPUR (Nov 18): Hwang DBS Vickers Research expects the The bearish external mood will probably force the benchmark FBM KLCI to slide towards the immediate support level of 1,445 ahead.

It said on Friday that overnight on Wall Street, key U.S. equity bellwethers dropped further by between 1.1% and 2.0% due to rising concerns that the global economy could be hit as the Eurozone sovereign debt crisis would likely worsen.

As for Malaysia, HDBSVR said on the local economic front, investors will be watching out for the 3Q11 GDP report card this evening, which would give an insight whether the Malaysian economy is on track to meet the official full-year growth forecast of 5.0%-5.5%. One media poll said consensus is projecting a year-on-year growth rate of 5.0% in the third quarter.

HDBSVR said within the list of listed companies that have announced their latest quarterly results Thursday evening, CB Industrial Product and TSH Resources surprised on the upside but YTL Land and Kossan Rubber came in below expectations.



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YTL Q1 net dips on broadband losses

KUALA LUMPUR YTL Corp Bhd saw its first quarter net profit decline by 9.7 per cent to RM251.8 million, mainly due to losses incurred in its mobile broadband business.

The company - which has investments in the power, cement, property development and others - registered a 3.1 per cent increase in revenue at RM4.54 billion for the first quarter ended September 30.

"The 2012 financial year has shown a promising start, with revenue increasing marginally over the same period last year, owing predominantly to the group's multi-utility businesses," Yeoh said in a statement yesterday.

Group net profit for the first quarter was slightly down on the back of a loss incurred in the "Yes" mobile broadband division operated by a subsidiary of YTL Power, which started commercial operations about a year ago.

This was not unexpected given the nature of the business and the front-end loaded ca-pital outlay required to build their nationwide network, he added.

YTL Corp expects its 4G operations to continue to pick up steam and begin recording a profit once the necessary scale has been reached.

Its unit YTL Power Bhd, which is also where its mobile broadband business is parked in, registered a 4.4 per cent increase in revenue to RM3.63 billion.

Net profit, however, was 9.8 per cent compared to the first quarter of last year.

YTL Cement Bhd saw revenue improve 17.6 per cent to RM544.7 million during the quarter. Net profit increased 4.4 per cent to RM75.8 million, despite higher production costs and increase in electricity tariffs that impacted the division's profit.

Its property development arm YTL Land & Development Bhd saw a slight decline in its net profit at RM2.9 million, versus RM3.2 million a year ago.

The decline was due to timing differences of project launches by its units and increase in operating expenses.

YTL Corp said it had early this week completed part of the final stage of the ongoing rationalisation of its retail and hospitality REITs with the acquisition of eight hotels by Starhill REIT. They included The Ritz-Carlton KL, the Vistana chain of hotels, and the Pangkor Laut, Tanjong Jara and Cameron Highlands luxury resorts.

This will enable Starhill REIT to focus fully on a single class of hotel and hospitality-related assets.

"Internationally, the trust is in the process of completing its acquisition of the Hilton Niseko in Japan. In addition, the group completed the restructuring of its property development business on November 4," he said. YTL Corp shares declined 1 sen to RM1.43 yesterday.



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The lure of waterfront homes in Penang

YTL Land & Development Bhd has yet to launch Shorefront Residences, its luxury project in Penang. Yet, within the first week that the project was open for registration through its website, the developer received more than 1,000 sign-ups. “We have already received enquiries from Singaporeans,” says Datuk Yeoh Seok Kian, executive director of YTL Land & Development.

The high level of interest from Singaporeans “was expected”, says Yeoh, given their “familiarity with and affinity for Penang”, which have translated into property investments on the island. “It’s especially more so now that Penang has established itself as the most-sought-after property market in Malaysia, as evidenced from its staggering growth in property offerings and prices,” says Yeoh.

Shorefront Residences is located in George Town, next to the historic Eastern & Oriental (E&O) Hotel in Penang and fronting the sea. It is expected to be launched by year-end, but anticipation is running high. “It is YTL’s first project in Penang and widely expected to set a new benchmark in the luxury segment,” says Jason Teoh, director of property consulting firm Henry Butcher Malaysia.

The freehold Shorefront Residences is a six-storey development with just 75 duplex apartments. There are only two units on each level, with sizes ranging from 3,000 to 4,300 sq ft each. Every apartment has private lift access, with some units enjoying private gardens and pools. The design architect is Singapore-based RT+Q, which has designed many private homes and condominiums in Singapore as well as Malaysia.

The development was designed to maximise the sea views from every unit, be it from the outdoor lanai or private garden, explains Yeoh. The swimming pool, including private pools, and water features are designed as infinity pools “to carry through a seamless continuation of the sea and the property”, he adds.

The pricing of Shorefront Residences has yet to be confirmed. However, market speculation is that it’s likely to be benchmarked against similar properties in the luxury segment, such as Selangor Dredging Bhd’s maiden residential project in Penang, the 138-unit By the Sea, located in the Batu Ferringhi area in the north of Penang island. By the Sea had a soft launch in September, and average selling price is RM1,200 psf (S$484). To date, five units at By the Sea have been sold.

The interest in Penang property can be seen from the turnout at the Penang Property Showcase in Singapore in September organised by Malaysia Property Inc (MPI). A straw poll at the seminar also showed that quite a number of Singaporeans had purchased properties in Penang recently.

In the face of rising inflation, investors are looking to preserve their capital by investing in something that will appreciate over time, says Datuk Lee Kah Choon, chairman of the executive committee of InvestPenang and director of Penang Development Corp (PDC), who was in Singapore for the Penang Property Showcase. “And that’s why for the last few years, there has been a steady stream of investors coming to Penang,” he adds.

Investors tend to adopt a value-for-money approach when considering Malaysian property vis-à-vis Singapore real estate. “The most luxurious property in Penang today is priced at RM1,200 to RM1,500 psf, which is equivalent to S$600 psf,” says Lee. “What can you buy in Singapore for that price? Something located in the suburbs. So, there’s a big gap between Penang and Singapore prices today.”

The living room of one of the 75 duplex apartments at YTL's Shorefront Residences.

Every apartment at Shorefront Residences gets direct sea views.

Potential investors checking out new condominiums offerings at MPI's Penang Property Showcase in September.

And that’s attracting Singaporean buyers. A Singaporean investor who requests anonymity says he likes Malaysian property and has been actively investing there for the last 2½ years. In that span of time, he has purchased five properties, three of which are condo units in Penang. “I’m a sucker for panoramic ocean views, and in Penang, you can get views far superior to Sentosa Cove or Keppel Bay for the price of an HDB flat,” he says. He likes freehold condos with large units, mainly four-bedroom apartments or penthouses in the prime locations.

According to the Singaporean investor, the capital gains on his Malaysian portfolio amount to just under 50% to date. There have been many offers from buyers, he says, but he has rejected all of them. “I’m sort of a collector. So, I just buy them to keep and stay in whenever my family and I visit.” He intends to double his portfolio in Malaysia, with Kuala Lumpur being “a high priority”.

Penang is very popular with foreign investors. “Although in absolute terms, Selangor is ahead, in terms of FDI [foreign direct investment], we’re still No 1,” says PDC’s Lee. “The government is keen on making Penang a location of choice for tourists and investors,” he adds. “Overall, Malaysia is doing relatively well within the Asean region.”

Penang’s economy is based on services such as banking, logistics and manufacturing. Total investments into the state amounted to RM12.2 billion last year, which topped the charts in Malaysia for highest recorded inflow of investments.

“Singaporeans have been the largest investors in Malaysia,” says Kumar Tharmalingam, CEO of MPI. “It’s quite common for Singapore to be a base for many purchasers, including foreigners, and Malaysians working in Singapore. There’s also been a surge in interest in Malaysian property among mainland China investors. They are looking at opportunities outside their country, and [Malaysia] is one of their investment options.”

The top foreign buyers of Penang real estate are Singaporeans, followed by Indonesians, Britons and what Henry Butcher’s Teoh calls “the Penang diaspora from all over the world”. Purchases by foreigners make up only about 2% of total property transactions in Malaysia, including Penang, notes Teoh.

However, the “Penang diaspora” — people from Penang but now living and working elsewhere, for instance, in major cities such as London, New York, Paris, Singapore and Shanghai — contribute to a significant number of overseas buyers. “They come back to Penang quite regularly, during special occasions such as Chinese New Year, Christmas or Qingming, and that’s when they buy property,” says Teoh. “So, the best time for developers to launch properties for sale is during these festive seasons.”

According to Teoh, some of the Penang diaspora buy a property in Penang as a retirement option, while others who have made money overseas are looking to buy something for their parents to upgrade their lifestyle. “When they convert their overseas currency, be it US dollar, pound sterling or Singapore dollar, into ringgit, they can buy a lot in Penang,” adds Teoh.

Even during the 2008/09 global financial crisis, the Malaysian property market proved to be relatively resilient, notes Henry Butcher’s Teoh. “Although GDP growth was in negative territory, the property sector wasn’t affected at all,” he says. “In 2010, we saw a historic high of RM1 billion worth of property transactions in Malaysia, including Penang. And based on transactions in 1H2011, we expect to see another 20% growth this year.” — The Edge Singapore


This article appeared in The Edge Financial Daily, November 1, 2011.

OSK Retail Research sees upside for YTL Land share price

KUALA LUMPUR: OSK Retail Research is betting on a major breakout for YTL Land & Development.

It said on Tuesday, Oct 25 that a rumour has been going around in the market that a few YTL companies may be involved in a corporate exercise.

OSK Research said that on Monday, besides YTL Land, YTL Corp was also among the most actively traded stocks.

It added that YTL Land is now consolidating the sharp rebound which started from the 75.5 sen low recorded in September.

“Although its recent strong rebound is still perceived as a bearish rebound, traders can consider accumulating the shares during the current consolidation phase and bet on a major breakout from the downtrend line extending all the way from the peak recorded early this year,” it said.

YTL shares actively traded on Bursa

PETALING JAYA: Driven by news of a group restructuring, shares in YTL Corp Bhd and YTL Power International Bhd were actively traded yesterday while those of YTL Land and Development Bhd chalked up impressive gains.

YTL Land jumped 19 sen or 17.92% to close at RM1.25 yesterday. Since reaching its 52-week low of 76.5 sen on Sept 26, the stock has amassed a gain of 63.4%.

Its parent YTL Corp, meanwhile, rose 4.03% yesterday to RM1.55, up 21.09% from the low of RM1.28 on Aug 9. The stock was actively traded with 10.3 million shares traded.

YTL Power, which also saw heavy volume with 13.8 million shares transacted yesterday, rose 2.72% to RM1.89. The stock had gained 15.24% from its 52-week low of RM1.64 on Oct 14.

The benchmark FTSE Bursa Malaysia KLCI increased by 1.59% to close at 1,465.35 yesterday, in line with the broadly higher closing of other indices in the region.

The Edge weekly reported that YTL group has hired local investment bankers to work on a possible corporate restructuring exercise. It was speculated that the exercise could involve YTL privatising one or two of its listed subsidiaries in order to enhance value at the holding company level.

Analysts said YTL Corp is trading at 1.34 times book value, much lower than YTL Power’s 1.6 and YTL Land’s 1.83 times.

Both YTL Power and YTL Land offer different value enhancing propositions to YTL Corp, according to a market observer.

YTL Power is seen as a cash cow, with recurring earnings before interest, tax, depreciation and amortisation of RM3 billion and annual free cash flow of RM1.2 billion to RM1.3 billion a year, whereas YTL Land has several strategically located plots of land in Malaysia and Singapore.


This article appeared in The Edge Financial Daily, October 18, 2011.