YTL Power's AI, data centre push to drive earnings

KUALA LUMPUR: YTL Power International Bhd's expansion in data centres and artificial intelligence (AI), supported by its power and water utilities businesses, is expected to drive earnings growth, said Hong Leong Investment Bank (HLIB) Research.

HLIB Research said YTL Power's data centre expansion could potentially bring its total capacity to 2.4 gigawatts (GW), supported by secured capacity and additional land acquisition.

It said the company had identified data centre and AI as key growth pillars, with its Kulai and Sedenak West hubs offering 2.4 GW of potential data centre capacity.

"YTL Power has doubled its Kulai data centre hub target to 1.2 GW, with 300 megawatts (MW) secured, of which 150 MW is operational, and a further 200 MW pending contract finalisation.

"It has also acquired 58.69 hectares of land at Sedenak West, with ready infrastructure for 1.2 GW, bringing total potential capacity to 2.4 GW, while actively seeking additional land for further expansion," it said in a research note.

HLIB Research said YTL Power had invested RM10.6 billion as of June, including RM2.1 billion in syndicated bank loans.

It added that the company was pursuing a RM15 billion sukuk programme and earmarking 2027 for an initial public offering (IPO) to fund its DC ambitions.

YTL Power was also exploring an expansion of its AI-GPU capacity, potentially unlocking a meaningful GPU-as-a-Service opportunity.

The research firm said the company, a globally recognised Nvidia partner, was supporting the deployment of advanced Nvidia GPU infrastructure in Malaysia.

"YTL Power currently has 20 MW of AI-GPU capacity deployed and is in discussions to scale this to 100 MW or more.

"This would support both the group's internal AI applications and potentially offer GPU-as-a-Service, similar to CoreWeave and Megaspeed," it added.

HLIB Research also highlighted YTL Power's recent securing of seven Siemens SGT-9000HL gas turbines, with a combined capacity of 5.25 GW for delivery between 2027 and 2032.

The turbines, it said, would support YTL Power's renewed independent power producer (IPP) growth while addressing Malaysia's need for new-generation capacity.

HLIB Research said the turbines could also strengthen YTL Power's position in securing Energy Supply Agreement proposals and support its data centre strategy.

Meanwhile, it said YTL Power could benefit from Ranhill Utilities Bhd's strategic positioning in Johor's water sector, following approved tariff hikes supporting infrastructure investment.

HLIB Research also estimated potential incremental earnings from the proposed development of three new water treatment plants costing RM3.5 billion by 2030.

It said the projects could be developed under an independent water producer or self-financing structure to support Johor's growing water demand.

HLIB Research maintained its "Buy" recommendation on YTL Power and raised its target price to RM8.08 from RM7.58.

"While we maintain our current earnings forecasts, we see meaningful upside potential should YTL Power secure new agreements across its data centre hubs, AI-GPU services, IPPs and IWPs," it said.