YTLP - update from 23 September

In the 2 weeks since my last post on 23 September on YTLP buyback, they company have been continuing its rather aggressive buyback program.

As of 7th October, the company have cumulative treasury share of 218,103,045 shares - with its latest buyback at price between 1.80-1.82.

This represent an increase of 126,582,500 shares from my last update 2 weeks ago. Assuming an average price of 1.75, this buyback is worth approximately RM220million.

All in 14 days.


YTLP-WB is trading at 0.56 and YTLP is trading at 1.82.

China Stationary - buying by company selling by owner.

Following my post of China Stationary Limited on 31 May 2013, the price of CSL have dropped from 0.35 to 0.20 currently (42% drop!).

While this experiment of mine in China share have not panned out too well (my average price is 0.305) I found their latest move to be quiet perplexing.

1) Majority shareholder selling out
The majority shareholder have recently been disposing of its share in a series of transaction. The majority shareholder's latest shareholding today is approximately 30.8%, down from 66.9% in January.

2) Buyback
The company have initiated a buyback recently with the purchase of 9M shares at 0.205 last week. I don't know how to analyse this latest move but a buyback at this price is definitely accretive to shareholder - I hope the company will undertake more buyback.

Based on the net cash position of the company, the disposal by majority shareholder defies logic. It suggest that the majority shareholder think the company is less worth than the amount of cash the company claim to have.

The buyback and the disposal is opposite move by what essentially is the same set of players in this game, this exercise contrast with the move by YTLP.

I will retain my small portfolio of CSL - but would not care to add to them. My gut feeling is telling me to cut loss, yet I remain curious about the contrasting move by the management.

YTLP buyback update

Since my last post on YTLP's buyback program back in May, something interesting have just occurred.

On the 28th August 2013, they cancelled a total of 250,000,000 treasury shares, while retaining 9,005,945 shares in treasury.

Based on my last post, they had a total of 137M treasury shares as of 9th May, giving a net buyback of around 122M shares in 4 months period. Using an average share price of around $1.60, this buyback is worth over RM200M.

"On 9/5/2013 - the company have approximately 137,324,245 treasury share outstanding representing approximately 1.86% of the total outstanding share."

Since then, the company have continued with their buyback program. As of today - they have a net cumulative treasury shares of 91,520,545 shares representing a net buyback of 82M in this month alone. This buyback is worth approximately RM135M using an average share price of $1.60.

Cumulatively since March 2013, the company have bought back approximately RM452M worth of its own shares. 

Tan Sri Francis Yeoh have repeatedly mentioned that YTLP is undervalued - this latest move is an affirmation of his view. For long term investor - buying a blue chip company with resilient cash-flow at price close to its 9 years can't really go wrong - in my opinion.

If you have available cash, I suggest you add this to your portfolio.

However, rather than going straight into its shares - consider YTLP-WB, its conversion price is RM1.21 and a long tenure (2018).

YTLP-WB is trading at 0.515, YTLP is trading at 1.77

YTLP buyback -update

Following my last post on YTLP buyback, the company have continued to be active in the market to buyback its share.

Its cumulative net outstanding treasury share as of 30 May 2013 is 166,347,745 shares.

On 9/5/2013 - the company have approximately 137,324,245 treasury share outstanding representing approximately 1.86% of the total outstanding share.

This represent an additional buyback of 29,023,500 shares from the open market. Assuming at an average price of RM1.51, the buyback is worth RM43,825,485 this month.

Today's announcement.

YTL Power - buyback mode worth RM116million since March 2013.

Over the past 3 months, I've not actively kept track of my holding in YTLP. With the election fever in the past months, the stock have not been terribly active.

However, having looked at the counter earlier today, I notice substantial share repurchase by the company since 4 March 2013.

On 4/3/2013 - the company have approximately 56,725,145 treasury share outstanding representing approximately 0.8% of total outstanding share.

On 9/5/2013 - the company have approximately 137,324,245 treasury share outstanding representing approximately 1.86% of the total outstanding share.

This represent a net purchase of approximately 80,599,100 shares. Assuming an average purchase price of 1.45 - this represent a buyback worth RM116,868,695. 

I view this development as a very positive move for minority shareholder as it will increase EPS assuming no change in operating environment.

The company generate > RM2b in operational cashflow annually. They can certainly afford to buy back more shares at this price. 

YTL Corp Berhad - Massive buyback program

Summary: YTL share price have been well supported through a massive share buyback program amounting to over RM600 million over the past 12 months. 

However underlying earning have also improved, primarily due to favourable results in its Cement segment. Quarterly earnings at YTLC increased by approximately 41% or RM 50 mil. 

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YTL Corp's share have been on a tear lately. The price shot up from its trading range of around RM 1.4 to RM1.6 to eventually trade above RM 2 before currently trading at RM1.80. Representing an appreciation of almost 29% (40 cents up from 1.40).

It's currently trading at approximately 12x forward PE (based on annualised Q1 earning) or 15x historic PE. 

If you review their P&L, you won't find anything extraordinary to warrant these price movement I reckon.. net income went up from 1.03B to 1.18B - roughly a 10% increase.

Its EPS and DPS figure shows improvement but is it really the cause of the appreciation??

EPS went up from 0.11 to 0.12 cents in last 12 months - about 9% increase. 

YTL Cement

Since their delisting in April 2012 after privatisation, the YTL Cement unit have achieved a 41% jump in quarterly profit. I wonder what would the price be if they were still traded. This result announcement was around June/August 2012.. YTL's price declined from RM2 since this result announcement.

 Based on current quarter earning, Net income is 392M or EPS @ .04 (.16 annualised) - approximately 33% increase from prior year's EPS of 0.12.

Based on segmented result at 30/Sept 2012 - it seems that the biggest contribution to the net income increase is YTL Cement and management service. 

MASSIVE buybacks

In the past month alone YTL repurchased approximately 15.4M shares amounting to approximately RM 29M through share buybacks.

Since January 2012 - their total buybacks amount to 361,850,700 units. 

(Looking at 15 Jan 2012 buyback announcement and 16 Jan 2013 buyback announcement - taking into consideration distribution of treasury shares in July 2012 of 647M shares)

The cash outflow from buybacks is pretty significant, in FY 2012 they spent over RM 500 M in buybacks. More than on distribution of dividends.

Given that they have continued repurchasing shares since its financial year end, I would estimate the total amount spent on repurchase of shares to exceed RM 600 M. Given that the share price movement does not track the result announcement, I would assume this massive buyback is the primary cause of the price increase. 

Implication?

YTLP's price is depressed due to a massive supply of discounted WB granted by YTL. If an attempt to privatise YTLP through shareswap as claimed by many analyst, then the minority shareholder of YTLP would be giving up share in a depressed YTLP (with potential catalyst) for a share that's trading 30% higher than its trading range on the back of a massive share buyback scheme.