Affin-UOB Research, 20 October 2003
By Alex Goh
YTL Power loses Jimah power plant?
The Edge reports that the Economic Planning Unit has transferred the mandate given to Jimah Power Generation Sdn Bhd to build a 1,400MW coal-fired power plant to an undisclosed company.
According to the report, Tenaga Nasional has discontinued negotiations with Jimah
Power which was earlier awarded the contract to construct the RM6bn plant. To recap, YTL Power owns 49% of Jimah while the Negeri Sembilan royalty holds the remaining 51% stake.
- If true, the development would not be surprising. Announced back in November 2001, negotiations have been protracted and one of the points of contention is said to be the structure of the new power purchase agreements, which are flexible in nature.
- No impact to our earnings forecasts or DCF valuation for YTL Power and YTL Corp as we have not included any contributions from Jimah Power.
- Accumulate maintained on YTL Power. DCF value of RM3.90 and gross dividend yield remains attractive at 6.0%.?
- BUY maintained on YTL Corporation. Trading at a 30% discount to our RNAV of RM6.25/share.