Malaysia’s YTL Power international expects to cut its dividend this year as the firm seeks to conserve capital in a bid to finance two large overseas power projects.
YTL is building a 470-MW oil shale -fired TPP in Jordan, which is forecast to cost US$2.1 billion and is finalising financing for a 1,320-MW coal-fired TPP in Indonesia.
Although earnings are forecast to rebound after a disappointing second quarter of 2018, YTL will need to conserve cash reserves ahead of dividend payments, Kuala Lumpur financial analysts Kenanga Research said in a note.
Near future earnings prospects will be challenging before the two new greenfield projects are completed, it said.
YTL’s plant in Jordan, to be fed by an adjacent oil shale field at Attarat um Guhdra, is not scheduled to begin commercial operations before the middle of 2020.
The Indonesia plant planned for Cirebon in West Java, comprising two 660-MW units, does not have a specified completion date.
YTL said earlier this year it was hoping to finalise financial arrangements during 2018. However, then would begin the process of development approvals which in Indonesia can be slow.
Earlier in this year, YTL said the completion of both projects would “significantly boost” the firm’s net generating capacity by 1,268 MW and improve overall profitability.
In May, the firm reported higher earnings and slightly improved profit for the nine months to March 2018.
Gross profit for the period was 2.2% up at US$166.3 million. It blamed lower margin on electricity sales and higher financing costs for blunting profits.
YTL is one of Malaysia’s biggest private power firms though it has more generating capacity abroad than at home.
It operates two gas power plants in Malaysia, with 1,212 MW of combined capacity, while in Singapore it operates 3,100 MW, which is 25% of the city state’s capacity.