PETALING JAYA: Earnings for YTL Corp Bhd moving forward will be driven by its utilities and cement divisions.

       Analysts note that the two divisions had shown sustained underlying recovery and were profitable in the financial year ended June 30, 2021 (FY21).

       On Tuesday, YTL Corp reported core losses of RM106mil for its fourth quarter (Q4), which brought FY21 to a core net loss of RM66mil. While the core losses narrowed significantly, the results were below expectations of MIDF Research and CGS-CIMB Research.

       MIDF Research said that going forward, the group’s utilities division would be catalysed by its 554 megawatt (MW) Jordan shale power plant, while its cement division could be positioned for acquisitive growth in South-east Asia.

       Given the weaker-than-expected FY21 earnings due to disruptions of the group’s cement operations because of movement restrictions, MIDF Research said it has trimmed its FY22 forecast earnings by 9% to RM161mil.

       For FY23, it is estimating earnings to come in at RM181mil, to be supported by full-year contribution from the 45%-owned Attarat Jordan shale power plant.

       The power plant is expected to come on stream in the second half of 2021.

       It noted that the group’s cement division is benefiting from cost reduction measures and efficiencies, as well as from consolidation of its position in the industry with over 60% market share.

       “We also do not rule out potential acquisitive growth for YTL Cement, utilising part of the RM2bil cash proceeds from the sale of its local units to Malayan Cement Bhd and the disposal of its China operations,” said the research firm.

       Other potential catalysts for the stock include a revisit of the high-speed rail (HSR) project and progress on Indonesia’s Tanjung Jati power plant, which could see YTL grabbing around US$1bil (RM4.15bil) in engineering, procurement and construction works.

       The research firm maintains a “buy” call on the stock with an unchanged target price at 76 sen.

       Meanwhile, CGS-CIMB Research noted that YTL Corp is still trading at a depressed FY21 price-to-book valuation of 0.57 times because of the uncertain outcome of the Kuala Lumpur-Johor Baru HSR proposal, among others.

       It added that the deal to inject YTL Cement’s domestic assets into Malayan Cement Bhd (which is pending completion) should unlock value for its integrated domestic cement operations and potentially remove the overhang on its share price.

       “We retain ‘add’ with a higher target price of 84 sen as we update the market cap of listed units and the higher target price of YTL Power International Bhd,” the brokerage said.