RAM Ratings has reaffirmed the AA1/Negative/P1 ratings of YTL Corporation Berhad's (YTL Corp) RM2 bil Medium-Term Notes (MTN) Programme (2013/2038) and RM5 bil Commercial Papers Programme and MTN Programme (2019/2044). 

While some business units have seen improvements, we have maintained the negative outlook on our expectations that the profitability and dividend paying capacity of YTL Corp's operating entities may be challenged by regulatory tightening in the UK water sector, overcapacity in Singapore's power sector, and the impact of COVID-19 on the Group's hospitality business and real estate investment trusts. 

Looking ahead, we recognise that divestments may boost the Group's cash pile and financial metrics in the short term. We have also assumed an indefinite delay in the investment outlay for the Tanjung Jati coal-fired power plant under its key utility arm, YTL Power International Holdings Berhad (YTLPI). Overall, a sustained improvement in YTL Corp's earnings/returns on capital employed towards long-term historical levels, and sturdy dividends from the core profit of its business units will be key to a revision of the outlook to stable, failing which the ratings will be pressured. 

For the latest fiscal year, we note the better performances by some business units and the completion of several asset divestments that have boosted YTL Corp's cash pile. The reorganisation of its enlarged cement operations under Malayan Cement Berhad in September 2021 will allow the Group to continually unlock synergistic benefits. YTL Corp's core pre-tax profit is estimated to have jumped 52% y-o-y in FY June 2021 as the turnaround of its cement operations and Singapore multi-utilities business as well as stronger construction earnings outweighed the weaknesses of other segments. Profits nonetheless still far underperform the Group's long-term historical levels. 

From a financial metrics perspective, RAM places more emphasis (although not exclusively) on company-lev