Monday, 7 January 2013

YTL Power, why was it listed?

The below article is from The Edge of last week, based on research by RHB (December 24, 2012), the emphasis is mine:

We are disappointed that YTLP declared only 0.9375 sen per share for its first interim single-tier dividend. We had expected 1.875 sen/share, as was declared in 1Q12. Therefore, we revised our FY13 dividend per share forecast lower from 4.9 sen to 3.7 sen. Yields do not look attractive at 2.5%.

Historically, the rationale for the cut in dividends was to prepare the group for any potential M&A. As at end-Sept, YTLP is sitting on RM 10 billion in cash.

We think YTLP's start-up operating losses may have peaked given a larger WiMAX subscriber base now. WiMAX losses widened to RM 309.8 million in FY12. A languishing stock price could potentially turn YTLP into a privatisation target. We believe this will help achieve YTL Corp's goal of transforming into a dividend yield play by reducing the cash outflows to minority shareholders among its subsidiaries.

YTL Power reduces its dividends, it sits on a huge cash pile of RM 10,000,000,000.00, its stock price is languishing, which means YTL Power might be privatised so that YTL Corp can lay its hands on the full cash pile, instead of sharing it with YTL Power's minority shareholders?

Minority shareholders must hope that a company does well and generates a lot of cash. But if that happens, then it will be privatised?

This sounds rather disturbing, minority investors can share in the risk, but not in the returns? Why then did YTL Corp list YTL Power in the first place?

This graph does indeed show that the share price has been coming down, from a level of RM 2.20 to now RM 1.65.

Good postings about YTL Power can be found here and here.

Updated: and a newer one from "Market Watcher" here regarding insider buying and selling of YTL Power, shares and warrants.


  1. Thanks for the recommendation on my post.

    Yes - I agree with you it's disgusting for a KLCI index company to treat its minority like dirt. The comment on "reducing cash outflows to minority among its subsidiaries" is particularly distressing. I hope institutional shareholder can do its part in Malaysia to push for better governance among listed company here.

  2. Welcome. I also hope that the authorities wake up to this.

  3. Minority share holder should ask YTL-P to publish it's dividend policy.

  4. Agree, especially for companies with large cash amounts, a proper dividend policy makes sense, so that investor know what they can expect. Cutting the dividend with RM 10 Billion in the kitty is unexpected.

  5. In Malaysia dividend policy isn't worth the paper it's written on unfortunately.

    Extract: varied because...."Board feels that the subsidiaries of the Group need to conserve their cash reserves for upcoming projects."

    I feel the responsibility for corporate management lies with the institutional shareholders, alas, our institutional shareholders have their own CG problem.

    @ Wind - I posted up some interesting data on shareholders movement of YTLP during the year, shows some notable disposal in period before price decline. You may find it somehow thought provoking as I have.

  6. Thanks, very interesting, link added to my posting.