PETALING JAYA: Despite sequential earnings improvement at YTL Power International Bhd
’s power and water operations, a rerating for the stock hinges on the monetisation of the company’s artificial intelligence (AI) data centre ventures and prospects in new domestic projects.
Analysts covering the stock viewed the results for its fourth quarter ended June 30, 2025 (4Q25) released last week as largely satisfactory but differed slightly on the stock’s upside, with Maybank Investment Bank Research (Maybank IB) Research describing the quarter as “a commendable one”, highlighting that “YTL Power’s 4Q25 results were in line with expectations as earnings improved sequentially at both YTL PowerSeraya Pte Ltd and YTL Wessex Water.
The research house, however, noted that after a 64% share price surge over the past six months, YTL Power’s positives have largely been priced in and accordingly downgraded its call to “hold” from “buy”, albeit with a slightly higher sum-of-parts target price of RM4.25.
CGS International Research (CGSI Research) similarly maintained a “hold” stance, despite raising its target price to RM4.20.
The research house pointed out that the company’s 4Q25 normalised net profit climbed 28% quarter-on-quarter (q-o-q), driven by a rebound in PowerSeraya contributions that were up 26% q-o-q on the back of a 6% increase in sales volume and a jump in earnings from the water segment.
Still, the research house stressed that “a sustained re-rating hinges on clearer visibility of AI data centre deals and new asset prospects.”
Meanwhile, RHB Research reiterated its “buy” rating and lifting its target price to RM4.77 from RM4.18.
The research house argued that while PowerSeraya’s earnings normalisation remains a drag, it would be “cushioned by improving Wessex Water after a tariff revision”.
It added the commercialisation of YTL Power’s first AI data centre would help to seal more future deals despite income from co-location services remaining minimal.
Telecommunications remained the weak link, with pre-tax losses widening substantially on lower infrastructure billings.
CGSI Research flagged that wider losses from this division offset part of the gains from utilities.
All three research houses underscored the importance of YTL Power’s data centre ambitions.
The group’s 20MW JDC2 AI data centre is already fitted out with Nvidia GB200 racks, with over half of capacity expected to go live by year-end for a multinational client, while the balance will support YTL Power’s in-house large language model, Ilmu.
RHB Research said in a note to clients that YTL Power has guided for partial commercialisation of the AI data centre next month, a slight delay from earlier guidance.
With the ability to build new facilities within nine to 12 months, YTL Power is actively engaging clients to secure demand.
Despite differing target prices, analysts also converge on the view that YTL Power’s current valuation reflects much of its near-term positives.
Maybank IB projected dividend yields of about 1.5%, while RHB Research’s higher target price assumes stronger contributions from both Wessex and PowerSeraya.
