Analysts' Recommendation

Kenanga Raises YTL Power Target Price To RM2.48

Bernama, August 20, 2010

KUALA LUMPUR, August 20 (Bernama) -- Kenanga Research has raised its target price for YTL Power International Bhd stocks to RM2.48 from RM2.45 after updating Wessex regulatory capital value figures and earnings adjustments.

YTL Power is a ''must have'' defensive stock given current market condition with financial year 2011 expectation gross yield of 7.6 per cent, it said in a research note Friday.

''We continue to like the group for its steady cash-flow utilities business and strong cash pile of RM7.4 billion,'' Kenanga Research said.

''YTL Power's key catalyst lies with the appreciation in the British pound and Singapore dollar as well as new acquisitions,'' it said.

The research house expects the Singapore dollar rate to appreciate by one per cent year-on-year to S$1.00=RM2.35.

''The resulting rate will more than compensate impact of lower Wessex revenue from further depreciation in the British pound, which is expected to slide one per cent year-on-year to one pound=RM4.80,'' it said.

''Note that we are not expecting any significant rate hikes for Wessex,'' it added.

Kenanga Research also said that positive news flow from YTL Power's WiMAX venture could provide further excitement.

''Market talk indicates the group is working on a number of WiMAX devices, which will be used on Android (mobile phones); if so, this potentially means WiMAX-enabled handsets will be easily accessible,'' it said.