CIMB Research said tougher restrictions is likely to slow down talks with potential off-takers.
PETALING JAYA: The potential tighter restrictions on artificial intelligence (AI) chip exports by US president Donald Trump’s administration could likely be a pending risk for YTL Power International Bhd
.
The restrictions could include tightening identity checks and inspections to prevent grey market exports or backdoor access to advanced graphic processing units (GPUs) via Tier-2 markets.
CIMB Research said in a report that “recent news on Trump’s AI chip policy have led us to adopt more conservative AI data centre (DC) scale-up assumptions for YTL Power, pending more clarity.”
At a recent second quarter of financial year 2025 (2Q25) briefing, YTL Power had stated it is still in talks with potential off-takers for its 80 megawatt (MW) second AI DC.
“While we believe YTL Power should eventually be able to attain national validated end-user status (as the off-takers for its AI DCs are US hyperscalers), potentially tougher restrictions could introduce uncertainties.
“Tougher restrictions is also likely to slow down talks with potential off-takers,” the research house noted.
Thus, to be conservative, CIMB Research has scaled back the AI DC assumption in its forecast to 20MW, which YTL Power has affirmed is on target for commercial launch this July.
“We will look to re-include the second AI DC into our forecast once we get clearer indication that YTL Power is closer to signing off-takers,” added the research house.
Apart from the 20MW AI DC, CIMB Research continues to assume YTL Power will progressively lease out 188MW of DC capacity on a co-location basis (20MW of which is to its own AI DC arm).
It noted “the removal of the 80MW second AI DC lowers our financial year 2026 (FY26) to FY27 core earnings per share (EPS) estimates by 6% to 8%, as the AI DC business is highly lucrative with an assumed 70% earnings before income tax, depreciation and amortisation (Ebitda) margin.”
Post revisions, CIMB Research forecast YTL Power’s core EPS to fall 10% in FY25 owing to lower PowerSeraya earnings due to lower retail and pool prices, rebound 22% year-on-year (y-o-y) in FY26 to a new record high and then grow by a further 1% y-o-y in FY27.
This is as YTL Power’s 20MW AI DC starts contributing in mid-2025 and its co-location DC leases ramp up.
CIMB Research has maintained a “buy” call on the stock, but lowered its target price to RM4.30 a share from RM5.20 previously.
“The stock trades at FY26 enterprise value and Ebitda of seven times, 11% below its five-year mean.
“While the valuation is attractive, we foresee near-term share overhang arising from YTL Power’s recently proposed bonus warrants exercise to be completed by the second quarter of financial year 2025.
“This will essentially be a non-renounceable rights issue,” added the research house.
The key downside risks include a steeper-than-expected drop in Seraya’s Ebitda, delays in GPU deliveries and lower AI DC take-up and lease prices.
“Excluding the AI DC (for example, 20MW in our assumption), YTL Power’s fair value would be RM3.79,” CIMB Research noted.
YTL Power shares closed 4.28% up to RM3.41 yesterday.
