PETALING JAYA: YTL Power International Bhd
is expected to deliver more stable earnings and gain a higher valuation over the medium term, driven by the expansion of its Johor data centre (DC) campus and growing contributions from long-term contracted income.
The utility and infrastructure group’s DC ambitions received a fresh vote of confidence following site visits by Kenanga Research and CGS International (CGSI) Research to its Johor campus, where both brokerages highlighted accelerating development progress, expanding capacity plans and improving execution capabilities.
Kenanga Research was highly encouraged by the substantial progress made over the past 1.5 years at the YTL Data Centre Park in Kulai, noting that total capacity is expected to double to 600MW by the end of 2027 from the current contracted 298MW, with scope for a further 600MW in subsequent phases.
The research house maintained its earnings forecasts and sum-of-parts-derived target price of RM4.55, alongside an “outperform” call on the stock.
During the visit, it observed that the campus had expanded rapidly since its first inspection in December 2024.
“In just 18 months, the campus has evolved from having a single operational asset (JDC1) and two under construction (JDC2 and JDC3) to four fully completed and running DCs (JDC1, JDC2, JDC3 and JDC6),” it noted.
It added that a new 110MW expansion is under construction, while the 215MW alternating current (MWac) solar facility, part of a broader 500MWac plan, remains on track for completion by year-end.
“The well structured land plot layout clearly accommodates future expansion phases,” Kenanga Research said.
“We concur with management’s guidance that meaningful earnings contributions from the DC segment will materialise in the financial year ending June 30, 2028 (FY28), once the initial 298MW capacity is fully operational,” it added.
The research house noted that its valuation currently reflects only the contracted capacity pipeline, estimating that the second 300MW expansion phase could add RM1.25 to its target price.
Meanwhile, CGSI Research said YTL Power had increased the planned facility load capacity of its Johor green DC park to 1.2GW from an initial target of 600MW.
The 1,640-acre site currently allocates about 15% of its land area for DC development, with the balance reserved for renewable energy infrastructure.
The brokerage noted that YTL Power’s management remains optimistic about demand trends. “Speed-to-market is becoming an increasingly important differentiator, with offtakers prioritising developers that can bring new capacity online sooner,” it noted.
CGSI Research said YTL Power is also seeking an additional 600MW power supply from Tenaga Nasional Bhd to support its expanded roadmap.
“Importantly, management indicated that provisions for a second consumer landing station have already been incorporated into the masterplan, allowing for a further 600MW of supply,” it said.
The brokerage highlighted improvements in project delivery timelines, noting that construction periods have shortened from around 24 months previously to about 18 months, while newer facilities are targeting completion within 12 to 15 months.
Beyond Johor, YTL Power outlined a longer-term DC pipeline of about 2.4GW, including plans for roughly 1GW in the Klang Valley. Its holding company, YTL Corp Bhd, owns about 11 acres in Cyberjaya earmarked for a 70MW DC project, with efforts underway to secure power supply.
CGSI Research maintained its “add” call on the stock, with an unchanged target price of RM4.60. “We continue to like YTL Power for its improving earnings quality and visibility, supported by rising contributions from contracted and regulated income streams and lower reliance on volatile merchant power earnings,” it said.
An analyst noted that YTL Power’s DC developments are steadily transforming its earnings profile, strengthening its position as a group with recurring income.
