YTL Power - Too Much Of Uncertainties Ahead

YTLP had a strong and stable cash flow, with its large cash piles (RM8.1bil) allowing it to look for more value accretive acquisitions.

However there are many negative factors which include the fact that YTL Communication (YTLC) continued to report loss in the third quarter of financial year 2014 (FY14), with breakeven expected only in FY15.

Concerned over lower regulated return on Wessex Water by OFWAT ( (Water Services Regulation Authority of England and Wales) at 3.85% over the next five year from 2014 regulatory period (FY15 to FY20).

The competitive and high-operating-cost-environment by Seraya Power in Singapore had also caused the division to be a major drag to the whole group, as it continued to experience pressure on both margin and sales volume due to increasing power generation capacity there.

Besides this, Malaysia power generation (Paka and Pasir Gudang) was expected to expire starting September 2015. This would end YTLP’s existing lucrative business segment.

Additionally, YTLP lost its tender for Track 3B 2,000MW coal-fired power plant to 1MDB. The Energy Commission was expected to pursue direct negotiation for another 2,000MW coal-fired power plant under Track 4A and 4B 1,000MW.

YTLP is expected to be one of the contenders.