The Motley Fool

The Three Numbers That Energise YTL Power International Berhad

Utilities are something that none of us can do without. And YTL Power International Berhad (KLSE: 6742.KL; KLSE: YTLPOWR) has tapped into our demand for water and energy in Singapore. It also operates in Malaysia, Australia and Indonesia.

The company, which is a subsidiary of Malaysian conglomerate YTL Corporation (KLSE: 4677.KL; KLSE: YTL.KL), reported a respectable, though not outstanding, Return on Equity of 8.2% last year.

Our FREE SGX stock pick!


We reveal 1 fast growing, Singapore stock pick flying under the radar, absolutely FREE!

IT means that the company generated MYR8.20 of profit on every MYR100 invested by shareholders. By contrast, the median RoE for the 30 companies that make up the Kuala Lumpur Composite Index (KLSE: ^KLSE) was 10.7%.

YTL Power’s decent RoE is due in part to its strong Net Income Margin of 10.3%. It implies that the company, which operates the PowerSeraya energy plant in Singapore, delivered a bottom-line profit of MYR10.30 on every dollar of MYR100 sales. By way of comparison, the Net Income Margin for Tenaga Nasional Berhad (KLSE: 5347.KL; KLSE: TENAGA.KL) was 14.1%.

YTL Power is not especially efficient when it comes to use of assets. Its Asset Turnover of 0.23 suggests that the company only generated MYR23 of revenues on every MYR100 of assets employed in the business.

YTL Power does make use of leverage. It had Total Liabilities of MYR29.2 billion, of which MYR13.5 was long-term debt. It had Total Assets of MYR38.9 billion, which equates to a Leverage Ratio of 3.39, which is around 50% higher than the market average.

By dismantling the RoE for YLT Power, it is easy to see how the company is energised. Its RoE of 8.2% is the product of a strong Net Income Margin of 14.1%; a pedestrian Asset Turnover of 0.23 and a large lump of Leverage Ratio of 3.39.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your FREE subscription to Take Stock - Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock - Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.

Like us on Facebook to keep up to date with our latest news and articles. The Motley Fool’s purpose is to help the world invest, better. 

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.