KUALA LUMPUR: YTL Power International Bhd 's disposal of associate ElectraNet could be a positive move for the utilities provider as it nets a sizeable disposal gain of RM2.2bil, which can be utilised for future expansion and investments.

       The group announced yesterday it had entered into a share purchase agreement with Australian Utilities Pty Ltd to dispose of its entire 33.5% equity stake in ElecraNet and its corresponding shareholder loan notes for A$1.03bil (RM3.06bil).

       According to RHB Research, the sale value represents four times FY21 price-book value, or a A$767.8mil premium over its FY21 net value of A$258.2mil.

       It added that the RM2.2bil gain on disposal will increase its net asset per share by 27 sen.

       "Recall that YTLP acquired the 33.5% equity interest and loan notes in ElectraNet in Dec 2000 for a total consideration of A$58.5mil," said the research firm in a report.

       It maintained its "buy" call on the stock with an unchanged target price of 68 sen, while still yet to factor in the gains on disposal in its valuations.

       Meanwhile, Kenanga Research expects YTL Power to continue its search for new investment with the cash in hand, especially as the group has historically expanded during an economic downturn.

       However, the broker said the market is still underappreciating YTL Power's improved outlook as the turnaround in PowerSeraya since 1QFY21 is expected to be sustainable while YES has shown consistent improvement over the past year.

       "As such, we still rate the stock an 'outperform' with an unchanged target price of RM0.89, based on 20% discount to its SoP valuation. We keep our target price unchanged as the disposal is not completed yet," said Kenanga.