KUALA LUMPUR: YTL Power International Bhd is expected to report stronger fourth quarter (Q4) financial year 2024 (FY24) earnings, driven by the turnaround of UK-based Wessex Water.
Hong Leong Investment Bank Bhd (HLIB) said Wessex will be reporting a turnaround in Q4 FY24 due to the effective 12 per cent tariff hike in April 2024 and the subsiding impact of the UK's inflationary index.
"Wessex is also due to enter into a new regulatory period (2025-2030), which will provide higher allowable returns with a higher asset base," it said in a note.
Meanwhile, HLIB said YTL Power reported a core net profit of RM723.9 million in Q3 2024, further boosting its nine-month period of 2024's results (9MFY24) to RM2.5 billion.
The bank deems the results within HLIB FY24 expectations (74.6 per cent), but above consensus (80.3 per cent), mainly driven by the sustained, strong contribution from SG PowerSeraya.
"Given the recent heatwave phenomenon, we expect stronger demand for power and pool prices in Singapore, benefiting PowerSeraya in Q4 FY24 (similar to the occurrence in Q4 FY23).
"Further earnings growth in FY25–26 will be driven by Wessex and DC/AI-DC. Management has guided good progress on the development of DC/AI-DC."
The research firm has a higher target price of RM7.45 (from RM5.55) for the stock.