YTL Power could be one of the Johor thematic ideas arising from its future development of data centre and solar assets in Kulai. RHB said it expects more DC deals upon the successful delivery of the Phase 1 project and expedition of solar assets riding on the implementation of the National Energy Transition Roadmap (NETR).
Following the release of its Johor thematic report, RHB is reviewing YTLP’s proposition in Johor, recall SIPP Power is a 70% owned subsidiary YTLP acquired 664ha of oil palm estates for MYR429m from Boustead Plantations in 2021 with the intention to develop large scale solar plants. A portion of the land is being carved out to develop 500MW Green Data Centre Park with a total investment value of MYR15bn. The DCs are owned separately by YTL DC, a wholly subsidiary of YTLP.
For Phase 1, the utility company is investing MYR1.5bn to build a Tier-III certified facility equipped with the ability to accommodate up to 72MW of capacity. The 3-storey building consists of two wings of Data Hall suites and mechanical & engineering rooms and also eight Data Hall suites spread over two wings per floor. Sea Ltd will be the anchor tenant for the 32MW (out of the 48MW) IT load hyperscale DC. Construction is ongoing and the first 8MW is expected to be put on stream by 1QCY24 and the remaining 24MW to come online progressively. YTKL is also looking to secure a new client for the remaining 16MW. We are guided that the contract tenure is more than 10 years and the DCs in Phase 1 could potentially generate PBT of MYR100m pa. We expect more potential DC deals upon the successful delivery of the Phase 1 project.
Meanwhile, although the DC’s electricity is currently supplied by Tenaga Nasional as of now, RHB views that YTLP is likely to construct solar assets for the DCs to be co-powered in the future with green energy from its solar farm. This could attract more DC investors in the long run. Any excess solar energy, if any, could be sold to the grid too.
RHB maintains a BUY call on the stock with a TP at MYR0.13/share on the progressive development of 300MW over the next decade with the assumptions of MYR30m/MW capex, 11% internal rate of return (IRR), 7.5% WACC, 14-year firm contract.