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The Multi-Utilities Sector In Asia: Hot Or Not?
By: Brian Brinker
Articles (44) Profile
By: Ong Qiuying
Articles (131) Profile

The multi-utilities sector is a hot sector to be in right now. Emerging countries, especially in Asia, are investing massive amounts in utilities.

At the same time, developed countries, such as the United Kingdom and Australia, are shaking up their own sectors to increase competitiveness. Among other things, public assets are being sold to private companies.

Significantly, basic infrastructure and utilities companies like YTL Power International stand to benefit substantially from such developments.

The International Monetary Fund estimates that as a whole, Asia is expected to record strong real gross domestic product (GDP) increases of six percent.

As GDP and infrastructure spending typically rise in tandem, the amount of capital flowing into infrastructure projects in Asia is expected to grow.

According to Preqin research, overall investments in infrastructure between 2010 and 2020 are expected to reach US$8 trillion across Asia.

A significant portion of this money will be spent on utilities, such as power plants, water treatment facilities, road networks and port connections .

Investment in infrastructure will be fuelled further by the growing demand, particularly in emerging economies of Indonesia, Thailand, Myanmar and Vietnam.

It is estimated that ASEAN infrastructure needs over the next seven years will reach an estimated US$600 billion.

Another area of potential growth for the company is the massive privatisation efforts going on across Europe and also Australia.

Notably, France, the United Kingdom and other economies have been looking to offload their massive holdings of utility companies.

The extent of these privatisation efforts remains unknown, but could end up being substantial.

Australia alone is looking to privatise at least US$100 billion worth of government assets, with utilities providers and infrastructure being chief among them. This suggests potential mergers & acquisition opportunities in the market should YTL Power be looking to expand its overseas operations further.

Already, YTL Power has successfully bought up Wessex Water in the United Kingdom. Wessex Water was a private company, which collapsed in 2002. YTL Power has been managing it ever since and has managed to turn its operations around.

YTL Power is also expanding outside of traditional utilities. For example, the company has established a 4G network in Malaysia in 2010 that will allow smart phone users access to faster data transmission under the YES-brand.

The network offers high-speed mobile internet with voice services covering over 70 percent of Malaysia and interconnects with all other voice networks, allowing it to offer a converged voice and data service.

Given that smart phone usage is now very high in Malaysia, above 63 percent, this service could become very popular .

Company Profile
YTL Power is an international power utilities provider. The company provides services for developing and maintaining various utilities, with five reportable segments namely, power generation, multi-utilities business, water and sewerage, mobile broadband network and investment holding activities.

YTL Power operates in Malaysia, the United Kingdom, Singapore, Australia, and Indonesia. The company prides itself on its sustainability focus and the reliability of its services and products.

In Malaysia, the group is the country’s first independent power producer, operating two gas-fired combined cycle power plants with a combined generation capacity of 1,212 MW.

In the power generation arena, it is also a significant player in the Singapore and Indonesian markets.

Click here to find out more about YTL Power, a likely beneficiary in the booming utilities market.

This article is brought to you by Bursa Malaysia Berhad. The research in this article was conducted independently by Pioneers & Leaders (Publishers) Pte Ltd (“Pioneers & Leaders”) and the views and opinions expressed in this article are Pioneers & Leaders’ own and do not represent the views and opinions of Bursa Malaysia. Bursa Malaysia does not warrant or represent, expressly or impliedly as to the accuracy, completeness and currency of the information in this article. In no event shall Bursa Malaysia be liable to the reader or any other third party for any claim howsoever arising out of or in relation to this article.
This is a co-written article of Shares Investment, which lays out the analytical ideas and thoughts of the authors, who are well versed in investments and market concepts.


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