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

KUALA LUMPUR: YTL Power International Bhd's push into data centres and artificial intelligence (AI) is expected to bolster earnings, according to Hong Leong Investment Bank (HLIB) Research. The research firm projects the data centre expansion could expand YTL Power's total capacity to 2.4 gigawatts (GW), through secured capacity and land acquisitions.

The Kulai and Sedenak West hubs currently offer 2.4 GW of potential data centre capacity. YTL Power has doubled its Kulai hub target to 1.2 GW, with 300 megawatts (MW) secured, 150 MW operational, and 200 MW pending contract finalisation. Additionally, the company has acquired 58.69 hectares of land at Sedenak West, offering ready infrastructure for 1.2 GW, bringing total potential capacity to 2.4 GW.

YTL Power is also pursuing a RM15 billion sukuk programme and planning to issue shares in 2027 to fund its data centre ambitions. The firm, a recognized Nvidia partner, is exploring AI-GPU capacity expansion, potentially unlocking a GPU-as-a-Service opportunity. Currently, YTL Power has 20 MW of AI-GPU capacity, with discussions to scale it up to 100 MW or more.

The company has also secured seven Siemens SGT-9000HL gas turbines, totaling 5.25 GW, for delivery between 2027 and 2032. These turbines will aid YTL Power's independent power producer (IPP) growth and support its data centre strategy. Additionally, YTL Power could benefit from Ranhill Utilities Bhd's strategic position in Johor's water sector, following approved tariff hikes supporting infrastructure investment.

The research firm estimates potential incremental earnings from developing three new water treatment plants costing RM3.5 billion by 2030. HLIB Research maintains its Buy recommendation on YTL Power and raises the target price to RM8.08 from RM7.58, anticipating meaningful upside potential from new agreements in data centres, AI-GPU services, IPPs, and independent water producers (IWPs).