YTLE

YTLE - the next generation of broadband service provider carried the brand YES. Typically, broadband business is operating in a Oligopoly market. The incumbents are the big 3 TM, Digi, Maxis, + stand alone providers are, P1, YES, U mobile. Advantages of Oligopoly business include ability to conspire the offering price of their services. Generally EBITA margin is above 50%, hence a lucrative business. Nonetheless, this business require high capex to reach its critical mass in order to enjoy economic of scale and huge advertisement spending and huge client acquisition cost include subsidising the phone purchase by customer.

YTLE has completed the four stages of market cycle. YTLE gone through the mark-up phase in Sep 2011 before the launched of its broadband services YES. it shoot up to 1.80 by mid Nov 2010 with extremely high volume. Subsequently, the stock has been marked-down all the way down to 70 sen within a year.

Mark-down Phase
Volume decline gradually during this phase. Observe the read box - there was sudden surge in volume and drastic drop in price signify selling climax. After the selling climax, it was quiet for another two months with price mark-down further from 75 sen to 70 sen. Strong accumulation seen in the green box with high surge of price and volume. it is also the first time the stock broke above MA50 and trade above MA100.

Insider Move

YTL Group controls 75% of the YTLE, the maximum holding by a single shareholder under the current Bursa rule. Insider was neutral for the last 10 months. The stock price movement will be dynamic and volatile as the free float in the market is minimal.


Financial Results
PAT has been on uptrend from 1 mil to 9 mil for the last 8 quarters.
PAT June 2010 = 16 mil
PAT June 2011 = 35 mil
PAT June 2012 (estimate)=9x4=36 mil.
Current market cap = 1,168 mil
2011 PE = 1168/35 = 33x
2012 PE = 1168/36 = 33x
Observe the PE is high by any standard. Extreme care is required to trade this stock. But the high growth and high EBITA margin is seen to reduce the high PE quickly after the critical mass is achieved.

TA Observation
1. Stock has bottom out.
2. Trading above above MA50
3. Current support level seen at MA100
4.Biggest Obstacle - Resistant at 92 sen.

Action
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