Faber

Following the announcement of the non-renewal of two of Faber’s UAE contracts, the price plunged by 23% and has since maintained at this level. It is believed that all the negative news from the non-renewal of UAE contracts has been priced in. As such, Faber will now refocus on managing its 12 hospitals and clinics in the UAE while at the same time expanding to military hospitals there. Faber’s 15-year concession to provide hospital support services in government hospitals is expiring in October 2011 and the company is currently awaiting approvals from the Ministry of Health and the Economic Planning Unit. The risk of losing the government concession is relatively small.

YTL Power

YTLP, which has a 21-year PPA with TNB until 2015, has a positive potential extension for its first generation PPA as a power plant in operation is better than an idle one. However concerns are over its lower internal rate of return from the power purchase agreement (PPA) extension. The power purchase agreements (PPAs) for the first generation power plants, including YTL Power’s plants, will start to expire beginning 2016. If talks to renew the first generation PPAs’ fail, the government would have to plant up 10, 000 MW of power in the next two to three years. In partnership with Enefit, YTL Power estimates that it can produce power via oil shale 30% cheaper than electricity generated via imported oil and gas feedstock.