YTL Power's reserved gas turbines could unlock RM8bil valuation uplift

KUALA LUMPUR: YTL Power International Bhd's seven reserved gas turbines could potentially generate RM750 million to RM850 million in earnings and deliver a valuation uplift of about RM8 billion if fully deployed.

CGS International Securities Malaysia Sdn Bhd said this was based on its estimate that a 1.4-gigawatt (GW) combined-cycle gas turbine (CCGT) plant could generate RM200 million to RM250 million in annual profit after tax, assuming project internal rates of return of eight per cent to nine per cent.

"This implies potential earnings of RM750 million to RM850 million from the seven reserved turbines, with a potential valuation uplift of RM8 billion if successfully deployed on a 100 per cent basis," the firm said in a note.

CGS International said the latest reservation of four additional gas turbine sets further strengthened YTL Power's competitive position and execution readiness as it pursues new CCGT opportunities.

On Sept 15, YTL Power and unlisted Ganda Power signed reservation agreements with Siemens Energy for four sets of SGT-9000HL gas turbines, adding to the three units previously secured.

This brings the total number of reserved turbine slots to seven, which could support about 5.25GW of new CCGT capacity.

"We view this development positively as it further strengthens YTL Power's competitive edge and execution readiness in pursuing new CCGT opportunities, particularly as data centre and industrial demand are driving the need for additional generation capacity," the firm said.

It added that turbine availability is increasingly a key differentiator in new CCGT awards amid tight global supply, extended lead times and the need to bring new generation capacity online quickly.

"Assuming a 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 in a note.

Meanwhile, RHB Research said it expects YTL Power's potential new gas plants to supply electricity to the national grid, helping meet rising power demand from data centres.

It described the new turbine reservations as timely, given Malaysia's need to develop between 6GW and 8GW of new gas-fired generation capacity to meet electricity demand by 2030.

"Last month, YTL Power acquired 58.68 hectares of land in Sedenak to build another 1GW of data centre capacity.

"This is in addition to the 1.2GW maximum capacity in Kulai. Assuming YTL Power develops up to 2.2GW capacity on both sites, we estimate a RM2.90 upside to arrive at a bull-case fair value of RM9.90," it said.

RHB Research maintained its "Buy" call on YTL Power with a target price of RM7, while CGS International reiterated its "Add" call and target price of RM6.50.

CGS International said despite the company's strong share price rally since early April, the potential listing of its data centre business could support a further re-rating.

It said the rebound in Singapore spark spreads to S$70-S$80 per megawatt-hour (MWh) in July 2026, from an average of about S$45/MWh in the second quarter of 2026, could provide upside to PowerSeraya earnings.

The firm maintained its forecasts for now as the sustainability of the higher spreads remains uncertain ahead of the re-contracting of a bulk of its volume in early 2027.

"The additional four reserved gas turbine slots provide further upside potential beyond what is currently captured in our target price, positioning YTL Power well to capture new CCGT capacity opportunities amid rising generation needs," it added.