CIMB and MIDF maintain their positive recommendations on YTL Corp, with target prices of 84 and 76 sen, respectively.
KUALA LUMPUR, 10 September 2021
CIMB raised its target price for YTL Corp to 84 sen as it remained positive on the cement, construction and utilities business driving an earnings recovery in FY22-24 after being profitable in FY21. It believes the revival of rail projects will also be a key catalyst.
CIMB reiterated its ADD rating and believes the stock is trading at a depressed FY21 P/BV valuation of 0.57x. ''The deal to inject YTL Cement's domestic assets into Malayan Cement should unlock value for its integrated domestic cement business and potentially remove the overhang on its share price.''
Upside risks: Contract wins and potential regional cement M&As.
MIDF also maintained its BUY recommendation on YTL Corp and left its target price unchanged at 76 sen following its FY21 results where group PBT improved by +52% yoy mainly driven by the utilities, cement and construction divisions.
''For the utilities division Power Seraya has been registering consistent earnings improvement on the back of higher electricity demand, an increase in fuel oil price and tank leasing rates as well as lower finance costs and higher retail margins. The cement division reported a PBT of RM563m (FY20: loss of RM2.5m). Though this was partly inflated by gains on disposal of its China cement operations, underlying earnings were driven by an increase in cement selling prices and volume, coupled with lower finance costs.''