Thursday, September 12, 2013

YTL Power International - Green Packet denies any offer to acquire P1

YTL Power International -
Price Target:1.58
Last Price:1.70
Green Packet denies any offer to acquire P1

-  We maintain HOLD on YTL Power International (YTLP), with an unchanged fair value of RM1.58/share based on a 15% discount to our sum-of-parts value of RM1.86/share.

-  The Star reported today that the YTL Group, DiGi.Com and TM are separately looking at acquiring a controlling stake in Green Packet’s 57%-owned Packet One Networks S/B (P1), which operates the WiMax 2.3GHz spectrum.

-  While the report indicated that DiGi.Com appears to be the closest to securing a deal with P1, YTL, which has sent a due diligence team, appears to be more compatible operationally with its similar WiMax bandwith.

-  But Green Packet said yesterday that it had not received any offers to purchase P1. Instead it is pursuing possibilities of collaborations and partnerships to complement the company's business strategy.

-  We expect YTLP’s 60%-owned YTL Communications, which operates the Yes WiMax services, to undertake such an acquisition or partnership, if it materialises.

-  Currently, Green Packet still suffers losses, amounting to RM70mil in 1HFY13 but EBITDA positive at RM17mil. Due to lower capex plans and better cost management, Green Packet’s EBITDA is expected to improve YoY.

-  P1, which had a subscriber base of 553,000 (almost comparable to Yes currently) as at 30 June this year, plans to migrate to Long Term Evolution 4G services, which are being rolled out by Celcom and Maxis.

-  Hence, in our view, a partnership with Green Packet may be a more likely option for YTLP, if any deal emerges, as the acquisition costs for a P1 equity stake could further enlarge Yes’ operating cost structure.

-  Yes WiMax’s 4QFY13 losses rose by 38% QoQ to RM76mil, translating into an FY13 loss of RM269mil, which dwarfs the group’s domestic power generation’s EBIT of RM178mil.

-  In our view, Yes losses have not shown any signs of abating as its services have ceased selling smartphones but focused on its ChromeBooks. The latter is part of the implementation of the 1Besterinet programme at 10,000 schools in East and West Malaysia.

-  But we are uncertain whether a sustainable turnaround in WiMax’s results could happen if Yes achieved its targeted subscriber base of 1mil. Hence, we maintain our FY14FFY15F loss assumptions for now.

-  The stock currently trades at a fair FY13F PE of 10x – within its three-year diluted PE band of 10x-16x. At these valuations, its dividend yield of below 1% is disappointing for a stock which carries a recurring earnings profile.

Source: AmeSecurities

Publish date: 11/09/13

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)

乔治·索罗斯(George Soros)



高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo

There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock