Asian Wall Street Journal Survey

Infrastructure and property company YTL Corp. topped the category of long-term vision. A YTL unit's joint venture in March 2007 was awarded one of several licenses for WiMax, a system for wireless broadband connectivity over a larger area than Wi-Fi hot spots can provide.

This is the 10th consecutive year that YTL has won this accolade, 7 of which was in The Far Eastern Economic Review. Tan Sri Francis Yeoh, Managing Director of YTL group said, “ I thank all the readers for this recognition and I want most to thank our Lord Jesus for once again perfuming YTL’s name. I give Him all the glory.”

By PETER JEFFREY

When Morten Lundal took over as chief executive of the Malaysian mobile-phone company DiGi Telecommunications Sdn. Bhd. about four years ago, he noticed something odd: DiGi was making many customers sign a two-year contract.

His senior staff told him, "Well, that's just the way it is for every company in the world," recalled Mr. Lundal, who has since moved to the British carrier Vodafone Group PLC.

His response: "But why, why, why, though? If a customer wants to leave us, we can't stop them anyway."

DiGi, Malaysia's third-biggest mobile-phone company by subscribers, behind Maxis Communications Bhd. and the Celcom (Malaysia) Bhd. unit of Telekom Malaysia Bhd., did away with the two-year lock-in on most domestic contracts. It tried other things new to Malaysia, too, such as introducing a single rate for all prepaid customers -- who buy blocks of minutes in advance -- regardless of time, distance and location.

Mr. Lundal's admitted "obsession" with simplicity and change helps explain why DiGi took Malaysia's top prize in the featured category, "Innovative in Responding to Customer Needs," in The Wall Street Journal Asia's Asia 200 survey of readers. DiGi was named the most innovative Malaysian company in the 2006 survey as well. It ranked fourth in this survey's overall assessment, down from third place.

A total of 2,477 executives and professionals participated in the survey, which was conducted last year between May 11 and July 3. On behalf of The Wall Street Journal, market-research firm Colmar Brunton polled subscribers as well as other businesspeople in the 12 Asian-Pacific countries.



Nestlé (Malaysia) Bhd., a publicly traded unit of Switzerland's Nestlé SA, earned the top spot as overall most-admired Malaysian company. Readers voted it No. 1 in the categories of corporate reputation and quality of its products and services, and No. 3 in innovation.

Maxis was second in the overall most-admired rankings after topping the list in 2006. Maxis is the biggest of the top three Malaysian mobile players by subscribers. It is this survey's No. 2 Malaysian innovator.

DiGi is small by comparison -- its annual revenue is less than Maxis' operating profit. But it is competitive. Its overall mobile market share by revenue has grown to 26% from 16% four years ago.

Mr. Lundal, 43 years old, took the helm in July 2004 after serving for seven years as an executive at Telenor ASA of Norway, which controls DiGi with a 49% stake. He left DiGi earlier this year for a senior international role with Vodafone, which has its own ambitions for the Asian cellular market.

His successor as CEO of DiGi is Johan Eric Dennelind, 38, most recently chief marketing officer of Telenor Sweden. Mr. Dennelind knows DiGi well, having served as its chief financial officer and chief marketing officer from 2004 to 2007 and played a key role in fulfilling Mr. Lundal's vision of simplicity and dynamism at the company.

"It comes down to people who live and breathe the aspirations of DiGi," says Mr. Dennelind.

"People have the DNA of thinking differently, so you just encourage them to dare to do what they think," he says, recalling how he freed employees to create "1 Low Flat Rate," a centerpiece of DiGi's marketing efforts that addresses the multiple-rate clutter of the Malaysian mobile market.

Mr. Dennelind sees retaining and attracting bold thinkers as DiGi's top internal challenge. When a job candidate arrives, he might take the candidate right into a DiGi meeting, not only to test him or her but also to make sure DiGi's own people respond well to interaction and surprise.

External challenges include macroeconomic factors, like a Malaysian fuel-subsidy reduction that could pinch consumer spending in the mobile market, and competition.

"We have been in a cozy, three-player market for a while," Mr. Dennelind says. "We now have to be mindful of new entrants."

The increasing saturation of the Malaysian cellphone market, with a penetration rate of more than 80%, doesn't help -- though Mr. Dennelind puts it somewhere around 70% when multiple SIM cards and Malaysia's large migrant population are taken into account. Over the past few years, industry profit margins have come under pressure from increased competition and are likely to face further pressure from higher customer acquisition and retention costs, though economies of scale have proved a boon to some, including DiGi. Rivalry is expected to grow sharper this year with the introduction of number portability, which will allow subscribers to take their cellphone numbers with them to a new provider.

DiGi must "strike a balance between offering a basic voice service and other value-added services, such as data to drive longer-term ARPUs," or average revenue per user, says Jeffrey Tan, senior vice president of OSK Investment Bank Research, based in Kuala Lumpur, Malaysia. He thinks DiGi, as a small and scrappy player, is well positioned in this environment. It now has "third-generation" spectrum and is expected to roll out more high-speed and advanced data services in the second half to capture higher-ARPU subscribers from its stronger rivals.

Mr. Dennelind is clearly excited about the 3G opportunities, and the chance to "bring Internet to the people, on both big and small screens." What are his plans? "We're playing our cards close to the chest," he says. "But expect surprises."

While DiGi focuses on the Malaysian market, Maxis owner T. Ananda Krishnan has taken his company private, largely to facilitate regional expansion. Allan Khoo, head of brand and marketing communications at Maxis, says that since the brand was established, in 1995, it has been based on "value, innovation and trust," attracting a customer base that now numbers 10 million in Malaysia. Mr. Khoo points to Maxis' mobile-data business as an example of the company's own innovation.

"Maxis has the largest and most-visited mobile [wireless application protocol] portal in Malaysia, with over 200 products and services, including the largest catalog of mobile music and games, mobile TV channels and other infotainment services, like football updates, news alerts and services to check traffic," he says, also noting Maxis' service for international remittance over mobile phones. "What all this technology translates to is simply this: The phone is not just a phone, but an extension of our customer's personality and lifestyle," driving Maxis to innovate.

One reason Nestlé (Malaysia), which is 72.6%-owned by Nestlé SA, won the gold appears to be because of what it isn't doing differently. Many of Nestlé's brands, including the Milo malted chocolate drink, enjoy an iconic status in Malaysia, where the company has a 95-year history and people drink more Milo than Coke.

"You don't order hot chocolate when you go out -- you order a Milo. Or you order fried Maggi" noodles, a Nestlé brand, says Foong Wai Loke, an analyst who covers the consumer sector for Credit Suisse. "They supply all these at the street-side eating places in Malaysia."

At the same time, Nestlé has allowed its brands to evolve. Milo began as a drink, then became a chocolate candy, a cereal and an ice cream. The company also has adapted to new trends. When smaller companies began offering flavored instant coffee, Nestlé brought out its own line.

The company has been working on a healthier image, as with its Maggi Tastylite instant noodles, which are air-dried instead of fried, a process that can reduce fat content by 60% to 80%, the company says. Nestlé now markets Milo as a nutritious chocolate malt drink that provides energy. Nestlé also has been making a name for itself as a provider of halal foods -- those permissible under Islam -- in Asia, the Middle East, Europe and Australia.



Nestlé faces some challenges of its own. For one, it must walk a tightrope between swallowing the rising cost of commodities, like palm oil and coffee, and passing it on to consumers. "Nestlé will continue with internal savings initiatives through operational efficiencies to avoid passing on the costs to consumers wherever possible," says group corporate-affairs manager Tengku Marina Tunku Annuar Badlishah.

Other notable names in Malaysia include Public Bank Bhd., the No. 3 most-admired company overall. Early in 2006, Public Bank, Malaysia's second-largest bank by assets, bought Hong Kong's Asia Commercial Bank, which it hopes will be a stepping stone to the China banking business. The company says it will establish an Islamic-banking subsidiary in the third quarter, addressing that burgeoning market. In April, the bank opened its Public China Titans Fund, which allows investors to tap into the growth prospects of large-cap stocks in the Greater China region.

Infrastructure and property company YTL Corp. topped the category of long-term vision. A YTL unit's joint venture in March 2007 was awarded one of several licenses for WiMax, a system for wireless broadband connectivity over a larger area than Wi-Fi hot spots can provide.

Genting Bhd., which took the top spot for financial reputation in the survey, nonetheless reported a 33% decline in this year's first-quarter net profit, partly because of lower earnings from its U.K. gambling business. However, the results also suffered from comparison with the year-earlier quarter, when the company realized some substantial gains. By contrast, revenue was up 6.6% to 2.16 billion ringgit ($660 million), thanks to the company's diversified business model and rising crude palm-oil prices. Besides owning Malaysia's only casino, Genting has interests in palm oil, oil exploration, power production and property development. Sister company Star Cruises Ltd., which shares a majority owner with Genting, is buying a 75% stake in a project in the Chinese gambling hot spot of Macau that will include a hotel and possibly a casino.

--Celine Fernandez contributed to this article.

Call of the Red Seas

Call of the Red Seas


Modest beginnings
Wealth Magazine, April 24, 2008

Like many Southeast Asian conglomerates, YTL is the product of several generations of sheer industriousness and a do-or-die sense of urgency.



Tan Sri Dato' Francis Yeoh's late grandfather, Yeoh Cheng Liam, left Fujian province in China in 1920 with not much more than a few dollars and a bag of clothes. He landed in what was then known as Malaya and found work in a timber shop. He saved up and started a timber business.



His son Yeoh Tiong Lay began working at age 13 to help pay for his siblings' education. He eventually started a construction company called Syarikat Pembenaan Yeoh Tiong Lay (Yeoh Tiong Lay Building Company) in 1955. It later became YTL, his initials.



It was not uncommon for him to take his seven children to the construction sites, and Tan Sri Francis can still recall the smell of cement.



The company's first construction projects were garrisons, army housing, hospitals and low-cost housing in Malaysia. When the energy crisis of the 1970s struck Malaysia, the business teetered at the brink of collapse as oil prices spiked about 20-fold within a brief period. The company's margins were too tiny to absorb the surge in costs.



The family's relatives and staff pawned their jewellery to keep the company afloat. For Tan Sri Francis, it was an early lesson that loyalty and staff are invaluable assets.



He was 16 at that time and was already supervising construction sites during weekends and holidays. Being the eldest of seven children, he offered to drop out of school, where he was the head boy, to help his father. The offer was sternly rejected.



The patriarch's reason presaged YTL's financial innovations in the future: Without formal training in engineering, he could not foresee the need for fluctuation clauses and other risk management techniques, he explained. Hence, the future of the company depended on Tan Sri Francis completing his education and receiving a degree in engineering.



The punctilious young man dutifully went to Kingston University in the UK and earned a degree in civil engineering. Upon his return to Malaysia in 1978, aged 24, his father appointed him Managing Director.

Today, Tan Sri Dato’ Seri Dr Yeoh Tiong Lay remains Executive Chairman and is said to have a great deal of influence over the group's direction, although his son remains the public face ofYTL. Senior executives who have worked with the group say the patriarch insists on prudence, which explains YTL's conservative approach in all deals. It may have shielded the group from the wreck of the 1997 Asian crisis, when many Asian stars fell because they had significant short-term US-dollar borrowings to finance long-term debt.




YTL Cement
Big Leagues


A year after Tan Sri Francis joined YTL as a degree-holding engineer, his father presented him with a symbol of success: A steel Rolex watch. “A Chinese businessman must have a Rolex,” Tan Sri Francis remarks with a laugh. The next year, it was a gold Rolex.



Thus far, YTL's trajectory is common to many entrepreneurial families in the region. The group could have remained a successful but indistinguishable Chinese family business, but Tan Sri Francis was not one to be content wearing construction boots and a gold Rolex for the rest of his life.



In everything he did, he sought to make a difference. His would be a life of collecting Patek Philippes, Cartier Tanks and Richard Milles, consorting with the likes of Jack Welch and Bill Clinton, and building a diversified business that rewards shareholders consistently.



YTL's entryway into the big leagues came in 1992, when Malaysia suffered a major blackout. It became clear that the national power provider, Tenaga Nasional, could not meet the demands of an economically growing country. The market was opened up to the private sector.



YTL got the country's first independent power producer (IPP) licence in 1993 and was tasked to build and operate two gas fired power plants. They were completed seven months ahead of schedule. But the IPP licence didn't come easily. It was won on the fact that YTL had previously completed several state projects, including Malaysia's first nucleus hospital, months before deadline.



When negotiating the IPP licence, YTL requested and received a deal that critics remember to this day for its audacity: Tenaga Nasional will buy 72% of YTL Power's output at S$0.07per kilowatt hour (kwh) (RMO.152 kwh) for 21 years - even if the national utility didn't need that much capacity. For YTL, it was a hedge against demand risk and a guaranteed income of nearly $500 million a year until September 2015. The IPPs that came later got far less lucrative deals.



In those days, citizens of developing countries typically paid more for electricity than people in developed nations because infrastructure financing in Third World regions like Malaysia and Indonesia came at a premium. Consumers bore the higher financing costs.



Until now, Tan Sri Francis gets incensed at the unfairness of it all. "Why should poorer nations have to pay more? It should be the other way around!" he exclaims.



Indeed, when YTL sought financing for the power plants, the major international banks demanded a premium for the political and other risks that Malaysia and the project were perceived to have. The loans would also be in US dollars, which presented exchange-rate risk for assets with revenues solely in ringgit. YTL refused the unfriendly terms.



To deliver YTL's vision - world-class services at Third World prices -Tan Sri Francis proposed a groundbreaking scheme: YTL would issue 10-year bonds in ringgit and the issue would be subscribed by Malaysia's top institutional investor, the Employee Provident Fund (EPF), a pension fund.



The government bought the idea and YTL issued $660 million {RM1.5 billion) worth of fixed-rate 10% bonds in 1994. It angered sections of the public, but it provided sufficient stability for the first IPP to operate and create a new industry.



Most importantly, it presented a viable financing model to the developing world.



This debt-financing approach became the pin-up model for many other countries wanting to privatise their utilities sectors. YTL was mentioned in every major central bank report, academic study, infrastructure conference and the like.



The Malaysian IPPs that won licences later also adopted a similar financing model. The first five raised more than $4.billion entirely from the domestic market, according to Euromoney and it defended the IPPs from the US dollar's precipitous rise against the ringgit during the Asian crisis.



Over the decades, YTL continued to innovate and surprise (critics would say annoy). In January 2007, YTL Corp raised $141 million (US$101 million) via Malaysia's first overnight sale of treasury shares. In Malaysia, treasury shares normally cannot be sold in overnight placements. But divesting 3.5% of the outstanding share capital on the market would have pressured the stock price downward.



Red Seas


But YTL doesn't win every time. In 1996, the group was given the opportunity to buy 80% of Hong Kong-base Consolidated Electric Power Asia. It would have turned YTL into Asia's largest IPP.



Tan Sri Francis managed once again, in astonishingly bold fashion to arrange for government financing. But he was outbid by a US firm. A banker who advised YTL on the deal said YTL would probably have won if it was listed and had access to the capital markets.



A year later, YTL Power launched an initial public offer, and has a current market cap of $6 billion.

YTL Corp The first to go public, in 1985 has a current market value of $5.6 billion. YTL Cement was listed in 1993 (current market cap $1.1 billion) and YTL e-Solutions a technology company, went public in 2002 (current market cap $327 million).



Starhill Real Estate Investment Trust -which contains Starhill Gallery, Lot 10, JW Marriott and The Ritz-Carlton Residenceas all in Kuala Lumpur –was listed in 2005 (current market cap $484 million). The group's total market cap is more than $13.2 billion, even during a time when the equity markets are battered out of their shells.



The group's compounded annual growth rate (CAGR) has been 55% since 1985 and dividends from all the listed units have been paid consistently each year. Tan Sri Francis often compares his group with Warren Buffett's Berkshire Hathaway, in the sense that both companies have delivered unwavering growth over long periods.



In the future, a CAGR of 20% until the year 2020 is realistic considering a relatively substantial base has been built, Tan Sri Francis says. After some thought, he declares "But we've crossed so many red seas eaten so much manna in the desert and still managed to grow by 55%, so I should say we can still do it:'



His ultimate aim is to build YTL into “a force for good. We want to bring joy to people and hopefully they will say, ‘we wish there were more companies like YTL, more leaders like you, more people who are caring.’ ”

YTL’s Wessex Water wins Queen’s Award for Enterprise

YTL’s Wessex Water wins Queen’s Award for Enterprise



United Kingdom, April 21, 2008

The company first committed to becoming a sustainable operation in 1997 with the publishing of their first sustainability report. Wessex Water then developed its ‘Sustainability Vision’ which sets out its sustainability goals and the mechanisms to achieve them into five key areas; the environment; outside interests (including customers and communities); employees; infrastructure and finances.



Julian Dennis, director of compliance and sustainability, Wessex Water said: “For Wessex Water, sustainability is not an added extra – it applies to all that we do. Our sustainability vision has been embedded thoroughly within our core business and we have received this prestigious award for our ongoing work. We’re delighted to have the commitment to our sustainability work recognised in this way.”



Wessex Water receives the award for continuous achievement in sustainable operations and an impressive commitment to effect positive change, often establishing new benchmarks in the process. Wessex Water’s key areas of success include:



Increasing its generation of renewable energy as part of its carbon management plan


Implementing ‘Assist’; an innovative, lower tariff to help customers on low incomes


Building an operations centre that is amongst the most sustainable offices in the UK


Its work with farmers to help them reduce the use of nitrates and pesticides, improving the environment and protecting water sources


YTL Group Managing Director said, “ I am indeed very proud that our Wessex Water in UK has won this most coveted award. This award is a further inspiration to all in The YTL Group globally, further enhancing our ‘green’ DNA. I am very proud of all of them”



Work with the Ministry of Justice, National Offender Management Service and Probation and Prison service to develop a scheme that trains offenders, prior to release, to fill roles within Wessex Water


An ongoing education programme; providing primary and secondary education packs to aid the teaching of the water cycle and water conservation within the national curriculum. Wessex Water also provides education advisors who visit schools and staff nine education centres in the region


Managing a thorough programme of communications with ‘stakeholders’ – the people who have an interest in the company, including customers, local communities, employees, regulators, investors and interest groups.


Julian Dennis continues: “We are working with the rest of the water industry on projects to deal with the big issues that the sector faces. We’re taking a lead in promoting best practice. Winning a Queen’s Award for Enterprise is testament to this commitment and our achievements so far.”



The Awards were inaugurated in 1966 as The Queen’s Award to Industry but are these days renamed as The Queen’s Awards for Enterprise divided into International Trade, Innovation and Sustainable Development.

Resilient earnings & attractive yield

Resilient earnings & attractive yield

DBS Group Research

BUY RM2.45 KLCI : 1,250.41
Price Target : 12-Month RM 3.00
Reason for Report : Company update
Potential Catalyst: Acquisition of new regulated assets, potential new water projects and higher dividend payout

Story: We understand that negotiations on the power purchase agreement (PPA) have not resumed after the general election. And if they do, we believe it would be on new tariff rates, and returns on additional capex for upgrading the power plants upon expiry of the existing concession. In any case, impact on local IPPs and resultant impact on YTLP’s earnings is expected to be minimal since they account for only 23% and 22% of group FY08F and FY09F EBIT. With full cost pass-through for its Malaysian and Indonesian power plants, the issue of higher fuel costs is virtually non-existent for these operations.

Point: We believe YTLP will continue to seek new acquisitions given its gross cash of RM7.6b as at 1H08. It recently proposed a RM2.2b convertible bond issue to refinance exiting facilities and to help fund potential new acquisitions. We envisage less competition for regulated assets as the subprime crisis has raised required rates of returns significantly.

Relevance: We favor YTLP for its defensive utility-type earnings and attractive 8.6% net yield based on sustainable net cash dividend yield of 4.6%, and potential 1-for-25 share distribution that provides 4% net yield. YTLP also enjoys stable earnings and agreed rate of returns for Wessex and Electranet operations in UK and Australia. Maintain Buy with SOP-derived target price of RM3.00.

Bold moves at the helm of a Malaysian Giant

From the age of 16, Francis Yeoh supervised projects and made decisions, preparing him for a career at YTL. (Palani Mohan/Bloomberg News)

Francis Yeoh, chairman of Malaysian conglomerate YTL
By Sonia Kolesnikov-Jessop Published: March 14, 2008


SINGAPORE: To the untrained eye, Francis Yeoh, chairman of the Malaysian conglomerate YTL, has had a charmed life in business. But appearances, Yeoh will tell you, can be deceiving.

"People think it's very easy," Yeoh said recently during a business trip to Singapore. "My God, it's so far from the truth. I've been like Sisyphus - every time rolling a stone up the hill and the next morning it rolls down again." After a brief pause, he added, laughing, "Well today, I still feel like Sisyphus but at least some stones are now staying up there."

YTL, controlled by Yeoh's family, is one of the largest Malaysian conglomerates, with a market capitalization of 12.3 billion ringgit, or $3.86 billion, and a significant presence in property development, cement manufacturing, power generation and information technology. The group recently posted a net profit of 189.33 million ringgit for the quarter through Dec. 31, up 24 percent from a year earlier, on 7 percent growth in revenue, to 1.52 billion ringgit.

The forerunner of the YTL group was a small construction company founded by Yeoh's father, Yeoh Tiong Lay, in 1955, a year after Francis was born. However, when the 24-year-old joined his father's business in 1978 as executive director, he was not handed a business on a silver tray: The company had ran into financial difficulties during the 1970s oil crisis and his father had had to scrape together enough money to send his eldest son to study in Britain.

"My father absolutely insisted on me studying," Yeoh, 53, recalled. "He realized the vagaries of his industry. He knew things were changing."

Because Yeoh had not spent his teenage years in malls or amusement parks, but on construction sites, where from the age of 16 he had supervised projects and made decisions - "really moonlighting as a student" - he felt ready to take over when the time came.

"My father trusted me," Yeoh said. "And when I joined he was happy to surrender. He'd worked out hard already, he was still quite young, but he understood that the industry was moving on."

His first major decision, one that would change the company's future, was to invest in engineers and equipment. "My father was looking at it as a risk, worrying about the next contract," Yeoh explained. "But I felt you will never get the contracts if you don't invest in people."

Yeoh established YTL's reputation in the 1980s by using the latest technologies, which allowed it to build high-rise properties faster than its competitors. "We came up with a technique using slim-form where we could build a floor every seven days," he said.

The young businessman impressed the then prime minister, Mahathir bin Mohamad, and YTL was given government contracts to build 12 district hospitals throughout the country.

Moving into owning property was a natural progression from being a contractor, and YTL started acquiring huge land banks. Today it has 122 million square feet, or 11.3 million square meters, of land in the capital city, as well as prime beach real estate in Malaysia. It also has holdings in Thailand, Indonesia and Singapore.

But probably Yeoh's boldest move was to venture into power generation in 1994, when the Malaysian government started to privatize the sector. Because he could not get his plans financed in ringgit by foreign banks, which wanted deals only in U.S. dollars, he persuaded the government to raise funds through a 15-year ringgit-denominated bond.

With smaller foreign currency exposure than other Asia-based companies, YTL emerged from the Asian financial crisis at the end of the 1990s in better shape to expand abroad. YTL bought British utility company Wessex Water for £1.2 billion, or $2.4 billion at the current exchange rate, in 2002 and owns power investments in Indonesia and Australia. Today, Yeoh pointed out, 70 percent of the company's revenue comes from abroad.

"YTL Power is one of the few companies that has demonstrated a steady yield and commendable growth for regulated assets," said June Ng, an analyst from Hwang DBS Vickers Research, in a recent report.

His next move will be into coastal development. Yeoh, who is an avid art collector and flies his own helicopter, has been accumulating coastal land in Southeast Asia.

"Just like there was wealth in Europe and property prices on the coast went up 1,500 percent over 25 years, I think the same thing will happen to coastal properties in Southeast Asia," he said. "But here it will take a maximum 15 years, and we've already been in this curve for seven years."

YTL Power Powering Up

Although recent YTL Power quarter result was nonetheless a bit disappointing, it is in my opinion a give and take situation given the reduced reliance on the contribution of operational profit in Malaysia. Frankly speaking, there are too many factors that may shake the entire economics fundamental of this developing country and those are not something that can be resolved by passing a bill or getting rid of some political party. Venezuela's President Hugo Chavez able to ride through waves of critism and face detrimental challenges from his opponents, even though his own intentions are doubtfully genuine. He got the charism and strong voice. Deterministic of wills show the capability of one's leadership.

Pardon me, but I see no corresponding in any of the governing party leaders at this point of time. They are simply too reactive and slow in reacting to persisting issues regardless of whether it is political, social or economy. The portray of Dr. M is truly deep inside the mind of the common. Do we still need Dr. M .. literally? No I say. He is way passed his retirement age, give him a break. We DO need someone who is visionary and with inviolatable ruling direction that give pressures to external forces rather than pushing the limit on his own people.

Ok, back to YTL Power. The intention to raise gas, electricity and petrol tariffs is here for sure. Since the price pressure will be passed back to back to consumer, no significant negative material impacts to YTL Power earning shall be foreseen. Earnings from Wessex UK will be increased in next few quarters given the changes in their tariff.

What I'm more interested in still the same old questions: When the shopping will begin? Acquisitions are imminent.

I reiterated my estimate towards YTL Power fair price at RM3 in 3 month time.

CNBC interviews Tan Sri (Dr.) Francis Yeoh on its “Squawk Box” programme

He's a more crazy shopper than I am. ;-). RM7BIL shopping vochers to be used.

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CNBC interviews Tan Sri (Dr.) Francis Yeoh on its “Squawk Box” programme

Singapore, September 12, 2007

CNBC - CNBC presenter
TSFY - YTL Corp Managing Director, Tan Sri (Dr.) Francis Yeoh Sock Ping

CNBC: The mortgage meltdown and housing troubles that have been seen in the United States have been raising concerns that a possible recession in the world’s number one economy which also happens to be the number one destination of Asian exports. So how are Asian companies preparing themselves for a possible slowdown? Let’s get the perspective of Francis Yeoh, group managing director at Malaysia’s YTL Corporation which has its fingers in many, many pies. He’s also in town for the Forbes CEO Conference joining us here in Singapore. Francis, it’s a real pleasure to have you once again on our show.

TSFY: It’s a pleasure.

CNBC: We’ve seen a lot of market volatility haven’t we over the last 6 weeks or so. How has that impacted your business at YTL?

TSFY: None at all. In the volatility of things, but we are in the long-term concession business. But this provides a rare opportunity. I’ve been thinking how on earth can there have been prosperity for the last eleven years. And it’s still looks like its going North and the liquidity seems endless and then came this innocuous sub-prime. Seems liquidity has shrunk. And this provides opportunities. Suddenly the private equity people can’t overpay anymore. It’s getting expensive, the gearing. So, I’ve always thought that the interest rates in the US were quite high. But the private equity guys have been snapping up infrastructure, etc. All the while at exorbitant, at what I call exorbitant prices. But now I think I have more opportunities.

CNBC: You are looking at infrastructure assets, I believe in and outside at Malaysia?

TSFY: Yes. 70% of our revenue from YTL Group comes from outside Malaysia so we are pretty much a global player. So we are watching all infrastructure around the globe.

CNBC: So you want to buy some big infrastructure assets within the next 6 months or so?

TSFY: Well if big is efficient, yes.

CNBC: In which particular markets here in Asia?

TSFY: There will be a lot of opportunities. Singapore is trying to sell some of their power assets. Regionally, there are people wanting to sell. India is trying to privatise some of their infrastructure assets, China is thinking about that. We are thinking about it in Malaysia, we are doing for example some water treatment of rivers. It’s the first economy in Asia to take this seriously. We use our Wessex Waters technology and we clean the water from the grade 4 to grade 2. All of Asia’s rivers have not been cleaned at all. So I think that provides a lot of opportunities.

CNBC (2nd presenter): Francis, good morning, good to see you.

TSFY: Good morning.

CNBC: One of the big flagship projects that you have been proposing is a high-speed railway between Kuala Lumpur and here, Singapore. Give us an update on the status of that project. How far away are you from developing it etc. Have you secured all the necessary financing? Just give us a status report on that.

TSFY: Well, I think that as far as this project goes, feasibility is no longer in doubt. As far as the way it’s going to go as a private sector-led project, as the prime minister reiterated last night, it should be so. It’s not going to be a government kind of project. So it is totally private sector-run. We are going through all the motions to make sure we explain, articulate very very well the economic benefits for both economies, Singapore and Malaysia. And the impact, I think, it’s positive for both now. I think most of the decision makers are aware of the fact that it is a good project but it is up to the private sector to lead it.

CNBC: Talking about the private sector, are you in any talks with any companies to get on board as joint venture partners to help you develop this project?

TSFY: At this point of time, there is no necessity except for technological partners who build this train. We are talking about a one and a half hour train ride between Kuala Lumpur and Singapore, which is incredibly exciting. And the dynamics will change, look how the London-Paris train has impacted businesses and properties over there. Properties actually converged from Paris to London, from 23% to 40% in 4 months.

CNBC: Francis, can we squeeze a little bit more information out of you with regards to these infrastructure assets that you are looking to by here in the region. How close are you to announcing one of these acquisitions to the market?

TSFY: I’ve been very patient for a while so I have been raising some money of late, slowly in anticipation.

CNBC: And you’ve got no problem at all raising money because obviously lenders are becoming a bit choosier about who they are lending to. Doesn’t that affect you?

TSFY: In YTL’s case, absolutely none. We’ve recently just raised some money in case we’ve prospective acquisitions. It was well, well over subscribed, the debt that we raised.

CNBC: So what is your budget? What is your arsenal right now?

TSFY: We’ve got about 7 billion ringgit cash reserves in the company, and that gives us the firepower to acquire up to 70 billion ringgit of assets. So I think we have enough, but are just adding a bit more into the war chest just in case opportunities come quicker than anticipated.

CNBC: Thank you very much.

Who got the Money $$$?

Who got the money? I mean CASH!!!! You guess.

Of course, YTLPower.

The intention of YTLPower to acquire the previously mentioned power plants.

Previous Post

Since this is not a surprise, I wouldn't hope much changing in YTLPower target price.

I call a BUY on YTLPower on a target price of RM3.00, a potential 25% upside based on the closing price of RM2.39 yesterday.

Usually, YTL's practice is to secure facilities in the form of bonds, loans, warrants, etc instead of using the cash in hand or treasury shares to sufficiently funding projects/acquisitions. Pros and cons. You can expect to see marginally higher assets leverage of YTL in the future. Good, I like it.

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YTL Power open to buying plants in Singapore

KUALA LUMPUR: YTL Power International Bhd. is open to buying power plants in Singapore, its managing director said Tuesday.

YTL Power was interested in investing in all types of infrastructure projects, "especially in stable countries like Singapore,'' Francis Yeoh said on the sidelines of an economic conference.

His remarks follow a recent move by Singapore's state-owned investment company, Temasek Holdings Pte. Ltd., to revive the sale of three domestic power generation companies, possibly in the next 12 to 18 months.

The companies - PowerSeraya Ltd., Senoko Power Ltd. and Tuas Power Ltd. - supply about 90 percent of Singapore's power and have a combined generation capacity of 9,070 megawatts.

Sale of the companies has been delayed several times since 1998.

In 2002, analysts estimated the companies were worth about 2 billion Singapore dollars (US$1.3 billion; euro0.97 billion) each.

Outside Malaysia, YTL Power - a subsidiary of YTL Corp. - has power generation assets in Indonesia. - AP

Temasek plans sale of its 3 power gencos by 2009

Review:

Potential buyers includes TNB (Malaysia), YTLPower (Malaysia), Intergen (US) and Tokyo Eletrical (Japan).

YTL Power strong presence in regional operations and its' piled up cash reserves are very encouraging in acquiring the power plants.

However it should be noted that all the power plants in this context already reached their output capacity and thus their revenues are capped within a forecasted range. The buyers will focus on the ROI instead.

I call a BUY on YTLPower on a target price of RM3.00, a potential 25% upside based on the closing price of RM2.39 yesterday.

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By Audrey Tan, Assistant Money Editor

Temasek Holdings will sell its three power generation companies (gencos) over the next 12 to 18 months in the biggest sale of Singapore's power assets since the liberalisation of the domestic energy market.

The three gencos - PowerSeraya, Senoko Power and Tuas Power - together account for 80 per cent of Singapore's power-generating capacity.

Each of the three gencos is worth about $2 billion, market estimates suggest.
All three companies are profitable, and both local and foreign potential buyers have expressed interest in buying the companies.

Temasek said in a statement yesterday that it was now 'timely' to sell its stakes.
Mr Wong Kim Yin, Temasek managing director of investments, said: 'We have seen a lot of interest from potential buyers since last year. At the same time, the Singapore economy is poised to grow strongly over the next few years.

'The conditions are conducive for the divestment of the gencos.'
Temasek is still open on how it will sell the three companies.
However, it is more inclined to sell them through a tender process, rather than through a public listing as some market watchers had expected.

It is also likely to sell the companies one at a time, rather than all at once.
A direct sale through a tender means that Temasek would not have to hold any residual stake in the gencos, which it may have to if it listed the companies.

'A straightforward sale through a tender will better meet the objectives of creating a liberalised electricity market in an orderly fashion,' Temasek said.
There is no limit on foreign ownership of the companies, although there are restrictions on the three gencos holding stakes in each other.

This long-anticipated sale comes after years of progressive steps to liberalise Singapore's previously state-dominated energy market.

Tuas Power was carved out of the Public Utilities Board in 1995, and Senoko Power and PowerSeraya from Singapore Power in 2001.

Ownership was transferred to Temasek, on the understanding that it would eventually sell all three companies.

The aim was to introduce competition into the contestable parts of the energy market, such as retail and power generation.

Privately owned gencos should support a competitive market that can expect more players as Singapore's power needs grow, the Government said when announcing the changes in 2000.
Besides the three Temasek-owned gencos, the other gencos in the market are SembCorp Cogen and Keppel Merlimau Cogen.

United States-owned Island Power is also building a $1 billion power station on Jurong Island.
However, its project has been delayed for years as it has been unable to bring in its own gas supply through the Sumatra-Singapore gas pipeline.

But recent amendments to the Gas Act gave the regulator, the Energy Market Authority, the power to open the national gas pipeline grid to all players.

Temasek yesterday also pointed to this regulatory change as a reason for the timing of its divestment.

The regulatory framework governing competitive wholesale supply of gas and power is now complete, it said.

'These developments have set the stage for a competitive, yet stable, power generation market to operate in Singapore,' Mr Wong added.

Over the past few years, Temasek has organised the gencos into three independent firms, each with its own board and management, he said.

Market watchers say that because the gencos have operated independently of each other, a change of ownership should not affect electricity prices.

Latest publicly available data shows that in its last financial year, PowerSeraya made a $129.7 million profit. It has a licensed capacity of 3,100MW and offers retail services through a subsidiary, Seraya Energy.

Profits for Senoko Power were $131 million in its last financial year. The genco has generation assets totalling 3,300MW and has a retail arm, Senoko Energy Supply.

Tuas Power, which owns assets totalling 2,670MW, made $177.2 million in profits in its latest financial year. It also has a retail arm, Tuas Power Supply.

Morgan Stanley and Credit Suisse are the financial advisers for the divestment, which is expected to begin in the second half of this year.

The entire process should be completed by the end of next year or early 2009.

Separately, the union that represents workers in the three gencos has put out a reassurance.
In a statement late last night, the Union of Power and Gas Employees said it recently concluded collective agreements with the gencos that will be binding on the new owners for the next three years.

'Workers' interests under the existing terms and conditions of the collective agreements will thus be safeguarded in the event of any sale,' it said, adding that if there were to be any layoffs, the union will ensure that workers are compensated fairly.