PETALING JAYA: YTL Power International Bhd
’s exposure to the recent jump in energy costs stemming from the Middle East conflict is mitigated by fuel hedging, own mine-mouth supply, and cost pass-through under power purchase agreements (PPAs).
Hong Leong Investment Bank (HLIB) Research said the company’s 45%-owned Attarat power plant in Jordan has its own mine-mouth oil shale supply unaffected by global prices, with the joint venture partner being Guangdong Energy Group Co Ltd and backed by Chinese financial institutions.
“Given the significant involvement of Chinese stakeholders and financing institutions, we believe this could lower the likelihood of the facility being directly targeted by Iranian missile attacks,” it said, adding that the plant contributed RM300mil to RM350mil per year to the company.
HLIB Research noted that Indonesia’s PT Jawa Power, in which the company has a 20% stake, “is generally safeguarded by a fuel-cost pass-through mechanism under its PPA structure”.
The gas-powered plant faces an increase in natural gas prices, with European prices having risen to about 55 euros per megawatt hour (MWh) from 30 euros per MWh.
“Management has indicated that Singapore’s YTL PowerSeraya Pte Ltd is largely protected through fuel cost hedging for all its contracted commitments,” it said, but expects global fuel costs to reflect onto the country’s open market structure with higher pool and retail electricity prices.
This could result in short term margin volatility, with the company’s management guiding for retail margins to start stabilising in 2027. It said Wessex Water and data centres in Malaysia and Singapore can expect to face higher electricity costs over time, particularly if the conflict prolongs.
It maintained a “buy” call on the stock with an unchanged target price of RM5.08.
