PETALING JAYA: YTL Power International Bhd
’s prospects will be buoyed by its data centre (DC) capacity expansion in the financial year 2027 (FY27) to FY28 and strong earnings growth by its subsidiary, Wessex Water, in FY26 to FY27, say analysts.
The group recently secured 90MW of new co-location (co-lo) leases at Johor Data Centre 2 facility, and expects total contracted capacity to grow by 200MW per annum over 2026 to 2028.
Meanwhile, Wessex has been allowed to raise its tariff by an additional 3% between 2024 and 2029 on top of the 17% granted by Ofwat – the independent economic regulator for the water and sewerage sectors in England and Wales – back in December 2024.
Following a recent YTL Power analysts briefing, CIMB Research said it is more positive on the group’s DC business outlook.
Consequently, earnings before income tax, depreciation and amortisation (Ebitda) for the DC business is estimated to reach RM1.4bil per annum by FY28 to FY29.
YTL Power believes that it will be able to grow contracted capacity by 200MW per year over 2026 to 2028, fuelled by demand from US operators looking to build artificial intelligence DCs in safe overseas locations with reliable power and water supplies.
The group is also exploring listing its DC unit, though no timeline has been provided, the research house said. However, it trimmed its FY26, FY27 and FY28 core earnings per share forecasts by 7%, 16% and 9%, respectively.
This is to factor-in a 33.3% share of Digital Nasional Bhd’s (DNB) net losses, steeper Ebitda per megawatt hour compression for YTL Power Seraya in Singapore and a delay in the new 80MW DC’s lease commencement to the fourth quarter of financial year 2027 (4Q27) from 2Q27.
CIMB Research maintained a “buy” call on YTL Power with an unchanged target price of RM4.05 per share.
In a report, TA Research believes that YTL Power Seraya is well positioned to benefit from the rise in Singapore’s spot and retail electricity prices.
“Given that the bulk of Seraya’s prior gas hedges expired in December 2025, we reckon it would have rolled over to new gas contracts in a big way towards end-2025 or early-2026, prior to the Iran war.
“Coupled with the higher electricity prices now, we see potential margin uplift for Seraya,” the research house noted.
On YTL Power’s DC segment, the group expects annual capacity growth to re-accelerate to 200MW per annum to hit a new target of 1.3GW capacity, estimated by 2030 to 2031.
TA Research raised its FY26 to FY28 net profit by 3% to 28% to reflect YTL Power’s more aggressive DC rollout as well as higher margin assumptions for Seraya.
It has re-affirmed a “buy” on the stock with a higher target price at RM4.21 per share.
Meanwhile, analyst with a local brokerage said a listing of YTL Power’s DC unit could materialise sooner rather than later.
This is based on the group’s latest DC expansion plan, which could require capital expenditure of up to RM30bil for the additional 1GW DC capacity within the next five years.
At its recent briefing, YTL Power indicated of a potential initial public offering either in Singapore, Malaysia or the United States in the “near term”, depending on the value that can be extracted.
The group is also in discussions with RAM Rating Services Bhd to create its first sukuk financing for its DC projects.
