PETALING JAYA: Analysts view YTL Power International Bhd
’s securing of four additional gas turbines, which brings its total number of reserved turbines to seven, as a positive, given the growing demand for power-generation capacity to support rapid data centre (DC) developments.
CGS International (CGSI) Research projected potential earnings of around RM750mil to RM850mil from the seven turbines, with a potential valuation uplift of RM8bil if successfully deployed on a 100% basis.
This is based on its estimates that a 1.4GW combined-cycle gas turbine (CCGT) plant generates RM200mil to RM250mil in annual profit after tax, assuming an 8% to 9% project internal rates of return.
YTL Power, Ganda Power and Siemens Energy recently signed reservation agreements for four sets of SGT-9000HL gas turbine units, adding to its three previously secured units.
According to the research house, the seven turbines together have the potential to support about 5.25GW of CCGT plant capacity, and are intended for power generation projects in Malaysia and the wider region.
“Assuming an approximate four-year construction period, we estimate YTL Power would be able to commission these new gas plants by the second half of 2030 or early 2031,” it said.
“Turbine availability is increasingly becoming a key differentiator in new CCGT awards, in our view, given the tight global supply, extended lead times, and the need to bring new generation capacity online quickly,” CGSI Research noted.
YTL Power’s added gas turbines enhance the group’s competitive edge and execution readiness in targeting new CCGT opportunities, especially as DC and industrial demand fuel the need for more generation capacity.
The research house reiterated its “add” rating on the stock, along with its target price of RM6.50 a share.
It noted its current target price did not factor in contribution from the four newly reserved turbines, which could provide further upside.
“We see the recent share price weakness as a good opportunity to accumulate,” it added.
Hong Leong Investment Bank (HLIB) Research, meanwhile, said the seven total turbine units should be well-received by the government given the potential shortfall in Malaysia’s power-generation capacity amid the rapid DC buildout.
“We understand that the first three gas turbines, with a combined capacity of 2,250MW, are expected to be delivered before 2030, while the remaining four units, totalling 3,000MW, will be delivered thereafter,” it added.
Additionally, the research house said YTL Power will be able to leverage the increased turbine capacity to support the long-term expansion of its artificial intelligence and DC businesses, which are targeted at 2.4GW.
HLIB Research maintained its “buy” call on YTL Power, with an unchanged target price of RM7.58 per share.
“YTL Data Center Holdings (YTLDC), Wessex Water and Ranhill should continue to support earnings growth, underpinned by YTLDC’s DC expansion, higher Wessex Water tariffs and upcoming water-asset concession contributions from Ranhill,” it said.
