The Star Online: Business
The Star Online: Business |
- Energy to move on
- Be flexible with young talents
- Leo Burnett, Arc Malaysia appoint Kay managing director
| Posted: 26 Oct 2012 05:25 PM PDT Losing the recent round of electricity-generation-capacity bid in Malaysia will not dampen YTL Power's spirit to keep seeking new opportunities for growth WHAT is YTL Power International Bhd's (YTLP) plan for its existing power plants in Malaysia? That's the question among market observers following confirmation that the multi-utility giant will not get its power purchasing agreement (PPA) with state-owned Tenaga Nasional Bhd (TNB) extended upon expiry on Sept 30, 2015. There are talks that YTLP will sell its power plants in Malaysia, but the company's managing director Tan Sri Francis Yeoh has not been very forthcoming about the company's plans as yet. "People like to speculate but we are known to do what needs to be done, and to announce the things that we need to announce at the right time," Yeoh quips when StarBizWeek asks whether there is indeed any plan to dispose of the company's power plants as the market is speculating currently. "One thing is for sure, we will continue to grow and expand. We have new opportunities coming up different (kind of opportunities), and it will surprise you," Yeoh says. YTLP is one of the three first-generation independent power producers (IPPs) that did not secure a renewal for their PPAs that would be expiring between 2015 and 2016. The other two IPPs are Powertek Bhd, which belongs to 1Malaysia Development Bhd (1MDB), and Port Dickson Power Sdn Bhd, which is a joint venture between Sime Darby Bhd, Malakoff Bhd and TNB. As announced by the Energy Commission early this month, following the completion of a renegotiation process with the first generation IPPs, only Genting Sanyen Power Sdn Bhd, which 1MDB now owns, and Segari Energy Ventures Sdn Bhd, which Malakoff owns, would be granted a 10-year extension to their PPAs upon maturity in December 2015 and June 2017, respectively. For YTLP, it seems like a double blow of sorts. Besides not being able to secure an extension for its PPA, the company has also lost out in its joint bid with its Japanese partner Marubeni Corp for the 1,000MW-1,400MW combined cycle gas turbine (CCGT) power plant project in Prai, which has gone to TNB's pocket. Plants for sale? YTLP has two power plants in Malaysia; one in Paka, Terengganu, and another in Pasir Gudang, Johor. The company wholly owns both the gas-fired plants that come with a combined generation capacity of 1,212MW, or about 30% of the total electricity generated by IPPs under the first-generation PPAs. According to analysts, YTLP's Paka and Pasir Gudang power plants, which are built on land leased from TNB, are already near the end of their lifespan and are therefore no longer operating competitively. Analysts suspect plans are already under way for YTLP to hive off its Malaysian power plants, which they claim is in line with recent developments in the country's power-generation industry that saw tycoon T Ananda Krishnan selling his Tanjong Energy Holdings Sdn Bhd to 1MDB in a RM8.5bil deal in March and Genting Bhd selling its Genting Sanyen to 1MDB in a RM2.3bil deal last month. "Judging from recent trend, it won't be surprising if YTLP were to sell its Malaysian power plants to someone else. It makes sense for the company to do so and perhaps this is the only plausible plan for YTLP at this juncture," an analyst says. "The non-renewal of YTLP's PPA with TNB implies that the former's power plants will be of no use after September 2015, and YTLP will then have to vacate from the land (which belongs to TNB) by dismantling its power plants. This clearing process' will incur additional costs," he explains. Analysts assert that the effect of YTLP selling its Malaysian power plants will be a positive one on the company, although the pricing will be an issue. "The valuation may not be that attractive given that the power plants have aged considerably," an analyst says. When it comes to who could likely emerge as the potential buyer of YTLP's Malaysian power plants, the common answer among analysts seems to be found in 1MDB. "It's clear that 1MDB has embarked on a plan to become a major power player in the country. Its strategy so far has been by acquiring existing power assets," an analyst says, adding that it is believed 1MDB have started doing its due diligence on the potential to acquire YTLP's power plants. Yeoh, however, refuses to comment on whether the group has received any offer for its Malaysian power plants, asserting that the announcement (if any) will be made through the proper channel. Growing business Meanwhile, Yeoh seems unfazed about not getting the renewal for YTLP's PPA that is due for maturity in Sept 30, 2015. "Malaysia makes up only a small portion of our business. The bulk of our business revenue come from outside Malaysia," he explains, to which analysts agree. Besides the power plants in Malaysia, YTLP also has power businesses in Singapore, Indonesia and Australia, and operates a water and sewerage business in the United Kingdom through its wholly owned Wessex Water Services Ltd. Apparently, the stock market has already priced in the possibility of YTLP not getting renewal of its PPA with TNB. This, according to analysts, is evidenced in the recent movement of YTLP's share price. The counter has been on a downtrend since mid-August, losing 23 sen, or 12.7%, from RM1.81 on Aug 15 to a low of RM1.58 on Oct 12. The outcome of the renegotiation of PPAs between first generation IPPs and TNB, and the winner of the 1,000MW-1,400MW CCGT power plant project in Prai were announced on Oct 9. YTLP on Thursday closed at RM1.61, unchanged from a day earlier. Analysts think YTLP's shares are significantly undervalued at present. Based on the company's fundamentals, the average target price among analysts who cover the counter is valued at more than RM2 a share. "We are not overly concerned about YTLP not getting an extension for its PPA, as the company's power business in Malaysia contributes not more than 20% to its earnings, and only around 10% to the YTL Corp," an analyst says. "Its big business comes from overseas, and these businesses have so far been performing quite healthily despite the global economic uncertainties," he adds. In another note, a market observer points out that YTLP not getting an extension for its PPA will not have an immediate impact on the company's earnings. "We have to be reminded that until the end of September 2015, operations at the Paka and Pasir Gudang power will remain status quo, and YTLP will still be deriving income from those operations," he highlights. "It's still some time to go, so the company may likely have something new up its sleeves already, given the business acumen of YTLP's management," the analyst explains. With a cash pile of RM9.5bil as at the end of June 30, 2012, (up from RM7.1bil a year ago), analysts reckon that YTLP has the capability to expand through new acquisitions, or the development of new capacities. Related Stories: |
| Be flexible with young talents Posted: 26 Oct 2012 05:16 PM PDT THE lingering issue of the shortage of young talent in the advertising industry can be tackled if proper steps are put in place to attract this group, according to a veteran in the ad industry. Naga DDB chief operating officer David Mitchell says ad agencies need to understand how this group thinks and what is their purpose in life if they were to retain young talents in the competitive creative industry. "The onus is on the industry to make it attractive for the younger group to join the creative industry, as this will help minimise the shortage of talent facing the industry. "The younger generation now has more options compared with 15 or 20 years ago as they now no longer look solely at, among others, remuneration," he tells StarBizWeek in an interview. Mitchell, who is also the Kancil Awards 2012 organising chairman, says agencies need to be flexible when dealing with this group and provide them a balance between the serious nature of the work and fun. For example, the design of the office and ambiance must be conducive to the younger group for them to stay on, he adds, noting that banking on consumerism and brands alone is not enough to attract young talents but rather promoting social change and clearly spelling out the purpose in life is the way forward. Some ad agencies, he says, have realised this phenomenon and are taking steps to better understand this group so as to retain them over the long term. Meanwhile, Mitchell says he is confident that Malaysian creative work can compete globally and can be of worldwide standard. To achieve this, close collaboration between agencies and the relevant parties, including agency team members, clients, suppliers and vendors is needed to develop a true Malaysian ad campaign. For example, he says, the late Yasmin Ahmad won international recognition by winning an award in Cannes as she told "Malaysian stories from the Malaysian context", adding that creative work and campaigns have to be authentic and of true Malaysian spirit and identity. On the issue of scam ads competing in events, Mitchell says it has declined dramatically as it is not a true representation of creative work although it was an issue in the past. Apart from digital media, he says, one of the trends in the ad industry, moving forward, is also about effectively engaging with clients and not a one-way communication alone. The Kancil Awards 2012, organised by the Association of Accredited Advertising Agents Malaysia (4As), has to-date attracted 30% more entries than last year's competition. According to 4As, the Posters category received the largest number of entries, followed by the Cyber and Film/Radio categories. Non-Broadcast Film, a new category this year, has drawn about 50 entries. Another new category is Radio Non-Broadcast for radio ads that are not aired on radio stations but over PA systems in supermarkets, shopping malls, petrol stations, elevators, buses and telephone. This year's awards ceremony will be held on Nov 2 at the Mandarin Oriental Hotel, Kuala Lumpur, with the theme "Stop Dreaming". |
| Leo Burnett, Arc Malaysia appoint Kay managing director Posted: 26 Oct 2012 05:15 PM PDT LEO Burnett Malaysia and its sister division, Arc Worldwide, have appointed Robert Kay as its new managing director. "Kay's passion for creativity and brands has allowed him to engage with some of the most recognised names in travel (Singapore Airlines and Etihad Airways), financial services (Westpac, NAB and Invest AD), automotive (Mercedes-Benz and Fiat), beverages (The Coca-Cola Co, Lion Nathan and Carlsberg Tetley) and technology (HP and StarHub)," said Leo Burnett in a recent statement. "His work has been recognised at Cannes, One Show, D&AD and Campaign Press & Posters and at major effectiveness awards." Leo Burnett Group Malaysia chief executive officer Tan Kien Eng said Kay's vast experience in a variety of fields would be "a plus" in ensuring the agency's growth. "We have had amazing growth for the past five years, almost doubling an already large scale agency. This is the perfect time as we are at a stage where we need to strengthen our management team to ensure that we have the best people to take us on to the next phase of growth," he said in the same statement. Over the years, Kay has worked for a number of world-class companies including in managing all aspects of marketing and product development for Australasia within a US$2.2bil division of The Coca-Cola Co; as account leader for Saatchi & Saatchi in both the United Kingdom and Australia; and as leader of one of Asia's most awarded marketing-services companies. "His most recent experience in Abu Dhabi as managing director for TBWA included working with the national airline of the UAE, Abu Dhabi's Formula 1, and the government's Media Zone Authority and investment fund in this rapidly growing city at the crossroads of East and West," said Leo Burnett. |
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