18th Dec 2012
PETALING JAYA: YTL Corp Bhd may have to wait a bit longer before making an offer to take listed subsidiary YTL Power International Bhd private, as the former's share price has come off quite a bit in recent months.
Most analysts believe YTL Corp would take YTL Power private via a share swap, as had happened with YTL Cement Bhd in February, because this would enable the Yeoh family, which has a 55% stake in YTL Corp, to preserve their cashflow and stake at the group level.
YTL Corp's share price has fallen 12.74% to RM1.85 since its June 20 peak this year.
An analyst with a local investment bank told StarBiz that YTL Corp's current share price level precluded an offer to take YTL Power private anytime soon. “YTL Corp and the family would want to maximise their advantage from the share price vantage,” she said.
The case for taking YTL Power private lies in the company's cashpile. “YTL Power has a cashpile of RM10bil, which YTL Corp will need for large multi-billion-ringgit infrastructure projects such as the high-speed rail project and also for the group's restructuring plans,” she noted.
YTL Corp managing director Tan Sri Francis Yeoh has also been reported to be interested in acquiring overseas assets.
Analysts have also noted that it would be more meaningful to take YTL Power private first before the other listed subsidiaries not only due to the company's cashpile but also contributions to earnings at the group level.
The other listed subsidiaries under the YTL Corp umbrella include YTL Land and Development Bhd, YTL E-Solutions Bhd and Starhill Reit.
Maybank Investment Bank Bhd analyst Tan Chi Wei said in a report that while the share swap would not be ideal for realising value for minority shareholders of YTL Power, shareholders should note the possibility of YTL Power turning into a “value trap” if the offer did not materialise.
“In the past 12 months, YTL Power's management has reduced the interim dividend per share (DPS) to just a quarter of the previous run-rate, resulting in a significant de-rating of the stock,” he said, adding that valuations were now at trough levels (1.1 times forward price-to-book versus the global financial crisis trough of 1.5 times).
Tan said that since there were no catalysts for the share price, a re-rating was not in the cards for the future. “This probability of YTL Power raising dividends or embarking on accretive acquisitions in the near term is low in our view,” he said.
Furthermore, the dividend yields of YTL Corp and YTL Power have converged with the decline in the latter's dividends, coinciding with an increase in the former's dividends.
“With YTL Corp guiding for an annual DPS of four sen, net dividend yields of YTL Corp and YTL Power are now almost at parity at circa 2%. This further paves the way for a share swap.
“Assuming a swap ratio of one time, there would not be a significant reduction in dividend yields for YTL Power shareholders swapping into YTL Corp shares,” he said.
However, Tan recommends buying into YTL Power as a cheaper entry into YTL Corp because of the premium that would be offered in the event of a share swap, implying a discounted entry into YTL Corp.
[Source]
No comments:
Post a Comment