YTL Power International Bhd. shares experienced a significant boost in early Friday trading, driven by optimism surrounding the company’s outlook following the release of impressive fiscal fourth-quarter earnings.
Strong Financial Performance
YTL Power reported a substantial increase in net profit for the fiscal fourth quarter, reaching MYR1.13 billion ($243 million) compared to MYR412.4 million in the same period last year. This surge can be attributed to higher contributions from its Singapore power plant and increased investment income. Furthermore, the company’s quarterly revenue soared by 56% year-on-year, amounting to MYR7.09 billion.
Positive Valuation and Target Price Adjustments
Hong Leong Investment Bank believes that YTL Power’s current valuation is relatively favorable, particularly given the strong earnings recovery of its Singapore unit. Consequently, the bank raised the stock’s target price from MYR2.05 to MYR2.90 while maintaining its buy rating. In addition, RHB Investment Bank also increased YTL Power’s target price to MYR2.21 from MYR2.00, while reaffirming its buy rating.
Promising Future Prospects
YTL Power’s power division exhibits potential for solid earnings in the future, and the company may witness improved profits from its joint venture and associates in fiscal 2024. This is due to the anticipated full-year contribution from its recently launched Jordan plant. RHB analyst Sean Lim acknowledged these developments and increased YTL’s earnings estimates by 10%-11% for fiscal 2024-2026, accounting for higher contributions from its power generation division and the Jordan plant. Notably, YTL’s stock is currently trading at an attractive valuation of eight times its fiscal 2024 price-earnings ratio, based on RHB’s earnings forecasts.
Overall, YTL Power International Bhd.’s strong financial performance and positive outlook have generated substantial investor interest and driven significant share price gains.
