YTL Power's share price has never been so cheap PE wise more recently. It is trading at potentially below 10x both historical and prospective PE based on its earnings potential.
A blogger friend who has been one of the early reader of my blog has written a well researched piece titled YTL Power - value share or value trap? (please read it)
Detailed information have been provided on the company but what many investors could not explain on YTL Power is how is it that the dividend return from the company is on the decline.
I looked back at my one post entitled Is YTL Power running out of ideas? and reconsider back whether the same situation still applies. As in many investors, I am not sure what are the decisions as I can only speculate. However, looking at the situation the company is in, I have mentioned of the challenges YTP Power is facing with the impending renegotiation of the sweet IPP contract (if any) come 2015 and the net cash position of the group. My own prediction is that the group is preserving cash to meet the coming situation in the near future.
At this moment, YTL Power is cheap valuation wise. I do not think it is a value trap but neither is it exciting as there are some uncertainties facing the group with regards to future income stream. Certainly Seraya Power is the main income generator but competition is getting strong as well which is why we are seeing lowering of margin despite the rise in revenue. To me, YTL Power is certainly preparing for the future with some of its future income becoming more uncertain while necessarily hoping to see a turn for its telecommunication business.
However, I certainly am not so sure of its privatisation as in some of the rumours that are circulating - to me the immediate challenge faced by the management is moving the company forward - i.e. to turn it into a growth company again.