Broker: Maybank Investment Bank Berhad
Date of Report: June 6, 2025
YTL Power Set for Re-Rating: AI Compute Launch, Robust Earnings, and ESG Initiatives Position Group for Growth
Overview: YTL Power’s Strategic Evolution and Market Position
YTL Power International Berhad (YTLP MK), a diversified utilities group with a global footprint, is poised for an earnings uplift and valuation re-rating. With an anticipated launch of its AI compute business in 3Q25, alongside stable core utilities and infrastructure assets, YTL Power continues to offer compelling risk-reward dynamics. Investors are eyeing key catalysts including the affirmation of Wessex’s medium-term recovery and the ramp-up of its data centre (DC) and AI compute business.
AI Compute Business: A Game Changer with Immediate Earnings Impact
YTLP’s AI compute business is on track for a 3Q25 launch, setting the stage for a significant strategic shift. Unlike traditional data centre colocation models, AI compute is more capital intensive per MW but features a minimal gestation period. YTLP plans to procure GPUs—the primary cost driver—only upon securing long-term offtake agreements, ensuring immediate earnings contribution upon launch.
- Estimated Capex: USD 25 million per MW for AI compute.
- Useful Life: Five years per deployment.
- Annual Profit After Tax (PAT): USD 1.6 million per MW.
- Project IRR: Approximately 23% for AI compute projects.
- Initial Deployment: 20MW, implying MYR 2.1 billion in capex, generating MYR 130 million PAT annually (YTLP effective stake: 60%).
With a 3Q25 go-live, the AI compute segment should contribute at least three quarters of earnings in FY26E, potentially lifting net profit forecasts by 4% in FY26E and 6% in FY27E. The AI compute and data centre operations contribute MYR 0.46 per share to the sum-of-parts (SOP) derived target price of MYR 4.20—a 22% upside from the current MYR 3.51.
YTL Power’s Global Utilities Portfolio and Data Centre Expansion
YTLP owns and operates a diversified portfolio of utility concessions, both operational and developmental, across six countries. Its data centre expansion underpins the group’s future growth:
| Building |
Capacity (MW) |
Type |
| DC 1 |
48 |
Colocation |
| DC 2 |
100 |
80MW Colocation + 20MW AI Compute |
| DC 3 |
40 |
Colocation |
| Total |
188 |
|
Valuation: Sum-of-Parts Analysis and Key Financial Metrics
The target price of MYR 4.20 is SOP-based, with each business segment valued using discounted cash flow (DCF) methodology. Data centre and AI compute business units account for 11% of the SOP value, or MYR 0.46 per share.
| Business Unit |
Equity Value (MYR m) |
Stake |
Attributed Value (MYR m) |
Per Share (MYR) |
% of SOP |
| Power Seraya |
13,164 |
100% |
13,164 |
1.61 |
38% |
| Wessex |
13,374 |
100% |
13,374 |
1.63 |
39% |
| Mobile |
263 |
60% |
158 |
0.02 |
0% |
| Jawa Power |
5,088 |
20% |
1,018 |
0.12 |
3% |
| Data Centre / AI |
5,440 |
70% |
3,808 |
0.46 |
11% |
| Attarat Power |
8,193 |
45% |
3,687 |
0.45 |
11% |
| Residual net cash |
-754 |
|
|
-0.09 |
-2% |
| Total Equity Value |
34,454 |
|
|
4.20 |
100% |
Financial Highlights: Resilient Earnings and Solid Balance Sheet
YTLP’s financial performance underscores its resilience and growth potential. Here are key figures (FYE June, MYR m):
| Year |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Revenue |
21,893 |
22,321 |
21,403 |
21,648 |
21,969 |
| EBITDA |
4,847 |
6,604 |
5,517 |
5,524 |
5,595 |
| Core Net Profit |
1,918 |
3,180 |
2,491 |
2,454 |
2,391 |
| Core EPS (sen) |
23.7 |
39.2 |
30.4 |
29.9 |
29.2 |
| Net Dividend (sen) |
6.0 |
7.0 |
7.0 |
7.0 |
7.0 |
| Net Dividend Yield (%) |
4.6 |
1.5 |
2.0 |
2.0 |
2.0 |
| ROAE (%) |
13.0 |
18.8 |
11.8 |
10.7 |
9.6 |
| Net Gearing (%) |
129.1 |
117.1 |
106.9 |
100.9 |
96.0 |
Other highlights:
- Market Capitalisation: MYR 29.1 billion (USD 6.9 billion)
- Issued Shares: 8,290 million
- Major Shareholders: YTL Corp Bhd. (54.4%), Yeoh Tiong Lay & Sons Holdings Sdn. Bhd. (9.8%), Employees Provident Fund (6.9%)
- 52-week high/low: MYR 5.32 / 2.90
- 3-month average turnover: USD 23.6 million
ESG Analysis: Above-Average Scores, Coal Exposure, and Governance
YTLP scores 58/100 in ESG assessment, with a robust internal framework and tangible long-term targets:
- Environmental: 20% effective stake in Jawa Power (coal), 45% stake in Attarat Power (shale oil), efforts in renewable integration and waste-to-energy at Wessex and PowerSeraya, solar-powered DC park in Johor.
- Social: Notable health and safety incident at Wessex Water (2020), 27% women workforce, female CEO at Wessex Water, proactive CSR (education, digital inclusion, COVID-19 response).
- Governance: Family-controlled via YTL Corp and Yeoh Tiong Lay & Sons Holdings, 12-member Board (33% independent, 25% female), no questionable related-party transactions, regular audits by PwC, no fixed dividend policy but active capital management and share buybacks.
ESG targets include:
- Carbon neutral at YTL group by 2050
- Net-zero operational carbon emissions at Wessex Water by 2030; total carbon emissions by 2040
- 60% reduction in absolute emissions at PowerSeraya by 2030 (from 2010 base)
Key Risks and Considerations
Investors should monitor:
- Changes to regulatory parameters impacting profitability
- Potential plant outages
- Currency risk, given the global asset base
- Coal and shale oil exposure, which may affect ESG ratings and investor sentiment
Conclusion: YTL Power Well-Positioned for Growth and Re-Rating
YTLP’s blend of traditional utility assets, strategic foray into AI compute and data centres, and an improving ESG profile make it a compelling play in the ASEAN utilities and infrastructure sector. The group’s undemanding valuation, robust earnings visibility, and clear catalysts support a BUY rating with a target price of MYR 4.20, implying a 22% upside. Investors should keep watch for the official AI compute commissioning and continued recovery in the group’s core utilities businesses.
