YTL Power-Preposterous or Possible?

Gunning for longer lease or a sale

I sometimes wonder whether we imagine too much.

Do we create scenarios to rationalize for the action we take or have taken?

Today, YTL WR went ex and the last they did was at 20 sen or so yesterday.

YTL Power warrants also stood at at best at RM 0.42 sen.

So, what happens now?

Peter Chin, the Energy Minister said there is some good news for the rakyat soon as regards the IPPs amidst the rejection of the tariff revision suggested by Tenaga.

So what could this be?

Let's built some scenario on a win-win basis.

First thing, it must be rakyat-friendly.

Remember; its election time fever.

Secondly, it must take the wind out from the sails of the Opposition PR.

Thirdly, it must favour existing IPPs for them to agree or to sell out on profit.

Win-Win-Win All Round

We can cut the melon many ways on this.

If we follow the trajectory of 1MDB, I could expect YTL's power assets in Malaysia to be acquired by it very soon. Once this gets out of the way, they will go for Malakoff which is easy because it is from a friendly party.

After that, there will be direct negotiations with Tenaga and the IPP rates will be more favourable to Tenaga and the rakyat.

Wanton Buyer?

Question to ask is: How good will the rates be paid to YTL Power and Malakoff for the acquisition?

My answer is plain as day. They will definitely be some compensatory factor somewhere, patent or latent.

As such, I can expect the best scenario is for YTL Power's share price to soar.

The next scenario.

The government announces that the rates for YTL Power and Malakoff have been reviewed downwards and  the period of their contract will now extend by another 10 years as compensation. Another great possibility in Bolehland.

Not as clean as a direct acquisition but on the long term, it will breathe fresh new life into YTL Power and Malakoff. also it will be a precursor to its asset sales to 1MDB.

End result- walla! The rakyat  gains, Tenaga gains, YTL Power gains and Malakoff gains.

Biggest winner will be the current government and as for the PR, someone has just pin a hole and burst their balloon!. Likely scenario,agree?

So, as a YTL Corp shareholder, what would you do?

Buy your allocated units and  also buy some excess?

Get your cash ready and buy in if you think that YTL Power will still be good after the expected government announcement soon.