Analysts' Recommendation

CSFB maintains OUTPERFORM on YTL Corp

Asian Daily, 2 June 2004

Target Price: RM5.90

By Tan Ting Min and Nik Hanim

Upward revision due to Indonesian power plant, higher beta play on YTL Power

Following YTL Power’s (YTLP.KL, RM3.56) acquisition of PT Jawa Power, we revised upward YTL Corp’s (YTLS.KL, RM4.46, OUTPERFORM, TP RM5.90) FY05 and FY06 earnings forecasts by 6% and 11%. We increased its target price to RM5.90, a potential 32% upside.

We prefer YTL Corp to YTL Power, as (1) its valuations are more compelling; (2) its property and building material divisions will benefit from Malaysia’s robust economy; (3) the company offers a higher beta proxy into YTL Power; and (4) the family’s money is invested in YTL Corp.

We maintain our OUTPERFORM rating on YTL Corp.

YTL Power acquires power plant in Indonesia

YTL Corp’s 60% subsidiary, YTL Power, has acquired a 1,220MW coal-fired power plant in Indonesia, which is EPS and DCF enhancing. We have revised up YTL Power’s FY05 and FY06 net profits by 8% and 15%, assuming that the deal is finalised on 31 Sept 2004. As a result, we are also revising up YTL Corp’s FY05 and FY06 net profits by 6% and 11%, putting the prospective P/Es at 14.5 times and 13.1 times. We upgraded YTL Corp’s “blue-sky” target price to RM5.90 from RM5.43 and maintain our OUTPERFORM rating.