Kenanga Research said it has raised its financial year 2023 (FY23) and FY24 profit forecasts for YTL Power by 26% and 34%, respectively.
PETALING JAYA: YTL Power International Bhd
expects to report another strong set of results in the fourth quarter of its financial year ending June 2023 (4Q23).
This comes on the back of the recent hike in Singapore power retail prices and a tariff hike for United Kingdom-based Wessex Water in April this year.
Kenanga Research said in a note that it saw the group’s 4Q23 net profit rising between 10% and 12% quarter-on-quarter (q-o-q) and has raised its financial year 2023 (FY23) and FY24 profit forecasts by 26% and 34%, respectively.
“YTL Power’s share price has more than doubled year-to-date, thanks to a nine-time year-on-year jump in its nine-month FY23 core profit to RM955.4mil.
“The current full-year FY23 consensus net profit estimate of RM1.26bil implies a 4Q23 net profit of around RM300mil (versus a 3Q23 core profit of RM528.4mil),” the research firm said, adding that it expects the electric utility group’s 4Q23 performance to beat the number handsomely.
It was noted that the power retail price in Singapore went up 43% in 1Q of the 2023 calendar year. As such, the group’s Singapore unit, PowerSeraya, is likely to report strong q-o-q earnings for 4Q23, going by YTL Power’s pre-tax profit of RM806.4mil for its power generation segment in 3Q23.
Meanwhile, in the United Kingdom, Kenanga Research said that Wessex Water is expected to turn profitable in 4Q23 from pre-tax losses of RM16.1mil and RM47.2mil in 2Q23 and 3Q23, respectively, after an average 9% tariff hike from April 1, 2023.
According to the research firm, this should be sufficient to offset rising operating costs.
Based on this, the research firm has upped the stock’s target price to RM1.85 (from RM1.48) and maintains an “outperform” call on it.
Besides the improved earnings prospects with the turnaround of PowerSeraya and Wessex Water, the research firm said there is also huge potential from the group’s new data centre venture.
