PETALING JAYA: Despite a cut in YTL Power International Bhd
’s overall profit forecasts, CIMB Research is still upbeat on the group’s data centre business.
The research house raised its forecast on earnings before interest, taxes, depreciation and amortisation (Ebitda) margins for YTL Power’s co-located data centre segment.
“Its 160 megawatt (MW) of new capacity is factored in for YTL Power’s financial years 2027 (FY27) and FY28 and upon gaining better understanding of the company’s operating expenditure, we believe our previous 50% Ebitda margin assumption for the co-located data centre business was too conservative.
“Consequently, we have raised this forecast to 70%. Additionally all its existing capacity of 188MW has been leased out,” CIMB Research said.
The research house said it believes YTL Power will soon start developing new phases for this segment of its business.
“We now assume an extra 160MW of capacity will go live in stages across FY27 and FY28. Thus, we project core net profit from co-located data centres will rise from RM115mil in FY26 to RM431mil by FY29.
“Excluding the 160MW in co located data centre expansion, YTL Power’s fair value would be RM4.08,” the research house said.
However, the research house cut its earnings forecast for the artificial intelligence (AI) data centre segment, now assuming 12MW is deployed on Nvidia’s DGX Cloud from 20MW previously. The research house said YTL Power will use the remaining capacity to commercially offer its large language model and other AI solutions.
Meanwhile, CIMB Research reduced its 2025 to 2027 core net profit forecasts for YTL Power by between 7% and 17%, bringing forward Ebitda per megawatt hour compression for Power Seraya but keeping long-term margins intact, while lowering AI data centre earnings.
“However, we maintain our ‘buy’ rating and raise YTL Power’s target price by 14% to RM4.55 on higher fair value for the co-located data centre business and the Wessex Water business in Britain. Key rating catalysts are from the new 160MW co-located data centre expansion in FY27 and FY28,” the research house said.
In addition, CIMB Research said projected strong Wessex Water earnings growth due to a 21% water tariff hike in Britain in April , and potential new Malaysian power plant projects also bode well for YTL Power.
