KUALA LUMPUR: The market may have yet to price in an improved earnings outlook on YTL Power International Bhd on the back of its turnaround in PowerSeraya and improving performance in YES over the past year.

       Kenanga Research said in a note that the stock is "underappreciated" following a consensus-beating performance in FY21.

       Stripping out a deffered tax of RM608.9mil, YTL Power's core profit of RM462.7mil met Kenanga's forecast and beat consensus expectations by 6%, said the research house in a note.

       The FY21 core profit was 21% higher from the previous year, mainly owing to PowerSeraya and YES posting substantially improved results over the past year.

       In 4QFY21 alone, the group's core profit jumped 41% to RM116.9mil on the back of a 30% increase in revenue due to a broad-based improvement across its business segments.

       "A stable earnings outlook, primarily thanks to the recovery of PowerSeraya which we believe is sustainable given the improved business operating environment for the industry in Singapore.

       "Furthermore, the yet to be completed Tuaspring acquisition will help PowerSeraya capture more value from the value-chain, from generation to wholesale to distribution for better profit margins.

       "Meanwhile, YES is expected to see improving results from better economies of scale from higher subscriber base," said Kenanga.

       The research house kept its FY22 estimates unchanged but introduced new FY23 forecasts with earnings expected to grow 6%.

       It projects FY22-23 net dividend per share of five sen.

       Kenanga reiterated "outperform" on YTL Power with a slightly lower target price of 89 sen from 90 sen previously on vauation base roll-over, based on a 20% discount to its sum-of-parts valuation.

       The stock is also supported by above average yield of 7%, it added.