One can make a case that YTLPower & YTLLand are good companies which have seen a sharp decline in share prices over the past 8-12 month. YTLPower is a steady income stock which generates good cash dividend as well as dividend in specie. However, YTLPower has invested in YTL-e which is setting up a new WIMAX mobile telecommunication & broadband services. This capital-intensive business would be a serious drain of YTLPower's resources for the next few years until YTL-e's operation is self-sustaining. You may notice that YTLPower's dividend has declined in FY2011 (here). In addition, YTLPower's main cash earner, the power generation division is under the cloud due to possible restructuring of the energy sector. Would YTL Corp want to buy up YTLPower at this juncture? If YTL-e continues to be a drag on YTLPower, wouldn't the share price of YTLPower be even lower in 2-3 years' time? A buyout in 2014-15 would be even cheaper for YTL Corp.
YTLLand is nearly completing a massive restructuring where it will become the dedicated property arm of the larger YTL group. That restructuring was announced in November 2010, which includes properties & property companies being sold by YTL Corp to YTLLand; settlement agreed; as well as a proposed issuance of ICULS. In fact, the only thing outstanding is the issuance of the ICULS where the closing date is October 20. For more, go here. If YTL Corp wants to takeover YTLLand, the management would not go through all these troubles & then does a volte-face at the last minute. So, I think a buyout of YTLLand is not likely. In fact, the whole buyout story has generated quite a lot of excitement which would only encourage shareholders of YTLLand to subscribe for the YTLLand's ICULS. Is that the real reason for the story? Only time will tell or maybe not.
Based on the above, I believe that YTLPower & YTLLand have come up to a level where one who is holding shares in these companies should consider selling.
Chart 1: YTLPower's daily chart as at Oct 17, 2011 (Source: Quickcharts)
Chart 2: YTLLand's daily chart as at Oct 17, 2011 (Source: Quickcharts)
9 comments:
Hi Alex ,
What do you think about Naim? It seem like have a reversal now after went down for a few months.
Tx!
How about ytl cement? Do you think there is a possibility of the group taking it private?
I bought YTL because it is trading with big volume and company buy back at last minute(4.49pm)to lift a few cents the last few days that I can create profit with day trade.
Do you think this will stop buy back and abruptly the price drop steeply?
Thanks for the information and opinion. Lets see what happen later after 20th this month.
Do you think YTL is afraid Permodalan will buy YTL like what it did to SPSetia?
Hi Eric
YTL cement has broken its long-term uptrend line at RM4.80. Its immediate resistance is at RM4.50 while immediate support is at RM4.15.
Hi luckystock2
Naim has just broken above its 10-week SMA line at RM1.86. If it can also break above the 20-week SMA line at RM2.05, the bottoming phase or the recovery may begin.
Hi Cliff Zhang
YTL is very big & may not be gobbled up by PNB. It has very good support at the long-term uptrend line at RM1.20. Now its immediate support is at RM1.35 & resistance at RM1.50.
Thanks. No buy back today. It even closed 1 sen lower than the previous price.
Alex what is ur view on ytlp recent share price drop?
Hi vincentchang
ytlp has very strong support at RM1.50-1.60. This is a safe entry level to get into this stock.
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