YTL ... Jun12

YTL Corp armed with rm14 billion net cash is unfazed by the new pricing regime that encourages the first generation IPPs to lower their power tariffs. It can live with in a regime without PPA. To recap, TNB and five IPPs would need to offer a reduction in commercial rates to the government, paving the way for a more competitive pricing regime in the industry. The government had called for TNB and five IPPs to participate in a bidding exercise that will close end July 2012 for an extension of their PPAs. However only half of that power pacts that will expire in five years will be extended, putting spotlight on YTL Power Generation Sdn Bhd.  YTL is the only IPP that has a take or pay clause in its PPA, which obliges TNB to buy the power it produces whether or not the national utility firm requires the capacity.

 

It has cash to undertake mergers and acquisitions in assets and in various silos of businesses. The group has started identifying assets to acquire, particularly in the hospitality and retail segments. It is now seeing some deals coming through after 2008.

 

The group derives 85% of its revenue and profit from overseas which are mostly regulated, is investing a lot in its 4G infra, hotels, properties, and the ERL which connects KLIA and KL Sentral. Its ERL will be benefited when the new LCCT links up with the ERL services in 2013.