Better times ahead for WiMax
At 102% of our FY13 and 104% of consensus, FY13 earnings met expectations. Revenue was flat from lower prices of fuel oil at its trading division while earnings were dragged down by provisions for power generation.
No dividends were declared for the quarter. We leave our FY14-15 EPS and SOP-based target price unchanged at RM2.55. Reiterate Outperform with catalysts expected from a turnaround of its broadband earnings and possible acquisitions of utility assets.
Power generation dragged down earnings
FY13 revenue was flat at -0.3% yoy mainly due to lower prices for fuel which affected the trading revenue of YTLP's merchant business. Despite narrowing losses from WiMax by 12.5%, FY13 group PBT was down 13% yoy, mainly due to provisions for the impairment of other receivables at its power-generation segment, partially compensated by a one-off gain from the de-recognition of financial assets and gains on the acquisition of an associate recognised in FY12.
Broadband to turn around
We are positive on the narrowing losses of YTLP's broadband division. YTLP expects this business to break even by end-2013 as it adds more subscribers. It now has about 200k subscribers and serves another 10m customers via the 1BestariNet school programme.
Coal-project bid YTLP has been shortlisted for a 2GW greenfield coal-fired power plant in Malaysia. The other bidders include Tenaga and 1MDB, both GLCs. As we previously highlighted, we do not expect YTLP to win this bid, given its lack of experience in power generation.