PETALING JAYA: MIDF Research has reaffirmed its ‘buy’ call on both YTL Power International Bhd and Ranhill Utilities Bhd, with target prices of RM2.45 and 80 sen respectively.

The research house is positive about the stake buy move for both parties following YTL Power’s recent announcement of becoming the substantial shareholder of smaller competitor Ranhill Utilities Bhd, with the acquisition of 243.33 million shares, equivalent to an 18.87% stake in Ranhill.

“It was understood that the 18.87% block was acquired from Cheval Infrastructure Fund LP, which in turn is expected to cease to be a shareholder of Ranhill,” MIDF said.

Following the stake acquisition by YTL Power, Ranhill had been among the top most active counters on Bursa Malaysia.

“Our quick channel checks suggest this is a strategic investment decision for YTL Power as it sees good assets within the Ranhill group such as its exclusive rights to the Johor water supply and the Sabah power sector exposure.

“Ranhill has been building exposure in the renewable energy (RE) sector via its soon-to-be operationalised 50-megawatt (MW) large-scale solar 4 (LSS4) plant and is actively looking to expand its presence in this space,” it said.

MIDF Research said YTL Power is similarly building its presence in Johor and RE via its upcoming 72MW data centre (Phase 1) and 500MW solar farm in Kulai.

YTL Power has also indicated an interest in participating in the RE exports to Singapore, which is pending finalisation of the RE export framework by the government.

“Entry of a large multinational utility such as YTL Power into Ranhill speaks volumes of the value in the latter,” said MIDF.

As at 11.26am, Ranhill’s share price rose by 80 sen or 10.88% to 82 sen, giving it a market capitalisation of RM1.06 billion.

Meanwhile, as at 11.33am, YTL Power’s share price was up by 11 sen or 5.05% at RM2.29, giving it a market capitalisation of RM18.68 billion.

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