HLIB Research remains upbeat on the company’s DC development.
PETALING JAYA: YTL Power International Bhd
’s data centre (DC) projects development are on track to provide long-term earnings growth from financial year 2026 onwards.
Hong Leong Investment Bank (HLIB) Research remains upbeat on the company’s DC development.
YTL Data Center Holdings Pte Ltd (YTLDC) and artificial intelligence-data centre (AI-DC) are expected to be the group’s next growth phase. The development remains on track for DC1-DC3.
YTL AI Cloud DC, using NVidia GB200 chipsets, is on schedule to complete construction (core and shell) in January 2025, targeted to fit in IT equipment within two to three months and commissioned in April 2025.
There will be no overheating issue, as YTLDC will be utilising the Direct-To-Chip cooling system, the research house noted.
Hence, HLIB Research reiterated its “buy” call on YTL Power with an unchanged target price (TP) of RM7 a share.
It believes the stock’s current valuation remains undemanding, given the strong earnings of PowerSeraya, earnings growth of Wessex Water (WW) and commencement of its DC projects. CGS International (CGSI) Research also maintained its “add” call on YTL Power with a TP of RM4 a share.
It noted securing offtakers for the AI DCs at attractive rates is a needed key-rerating catalyst for YTL Power while improved final determination by UK regulator, Ofwat, for subsidiary WW will help reduce earnings uncertainty at the group.
The downside risks cited include execution setbacks and market risks for DC projects, and heavy capital expenditure for DCs and WW leading to increased gearing.
The DC segment is set to pilot YTL Power’s next growth engine and why the group acquired 1,600 acres of land in Kulai, Johor in 2021, said HLIB Research.
To-date, YTL Power owns 100% YTL Sentul DC (5MW) in Kuala Lumpur, 50% of Dodid (12.5MW) in Singapore and 100% YTLDC (supporting up to 420MW to 430MW IT load) in Johor.
YTLDC is promoted to become a Green DC hub, supported by its 500MW of solar farm surrounding the physical data centre buildings.
There will be six phases of development for YTLDC, of which DC1 48MW is mainly for Shopee; DC2 100MW for YTL AI Cloud; DC3 40+40MW for an undisclosed off-taker; DC4-6 have not secured any off-takers yet, while there are parties expressing interest.
Spanning 200 acres, YTL’s green DC park in Kulai, Johor, is currently designed to accommodate a total IT load capacity of 450MW (facility load 600MW).
The project is planned for phased development, initially set over a 10-year period. There is a direct dark fiber cable route (owned by the YTL Group) from the site to Singapore.
There is also 1,400 acres, currently plantation land, surrounding the facility, earmarked for a 500MW solar farm.
