Monday, March 28, 2011

YTLPower ... Mar11

Industry observers are concerned with YTL Power’s lower-than-expected second interim single tier dividend per share (DPS) of 1.875 sen.

There is still uncertainty of the level of future dividend payouts.
The management is looking to conserve cash, as YTL Comms plans to spend more to boost coverage.

The risks include: 1) unfavourable forex movements, which will adversely affect the translation of foreign earnings; 2) potential change in competitive landscape under the National Energy Plan; and 3) execution risk and poor subscriber numbers for WiMAX.

Without the management’s assurance regarding future dividends, YTL Power may lose a bit of shine since the key investment thesis for the stock has historically been high dividend yields.

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