RHB Investment Bank Bhd (RHB Research) has maintained its BUY call on YTL Power International Bhd with a higher target price of RM6.00, up from RM5.00, citing accelerating data centre expansion, stronger earnings contributions from Ranhill and PowerSeraya and potential upside from a possible data centre listing, while also highlighting a ramp-up in capacity plans and improved long-term valuation assumptions.
The research house said YTL Power is rapidly scaling its green data centre park in Kulai, Johor, where 298 megawatts of capacity has already been contracted and around 70% physically completed. It noted that management has begun constructing an additional 260 megawatts to be completed by end-CY27, bringing total estimated capacity to 578 megawatts by end-FY28, higher than previously assumed.
RHB Research added that the group is now targeting up to 1.2 gigawatts of total data centre capacity at the Johor site, up from an initial 600 megawatts plan, supported by plans to contract around 200 megawatts annually and secure additional electricity supply from Tenaga Nasional. It also highlighted plans for a 600 megawatt solar farm on-site, with 215 megawatts already commissioned, alongside potential expansion into the Klang Valley, ASEAN and the United Kingdom.
According to RHB Research, a potential listing of the data centre unit could unlock significant value, estimating a possible valuation of around RM28 billion based on a 20 times EV/EBITDA multiple on RM1.4 billion earnings. It said this could translate into about RM3.06 per share in value and represents meaningful upside to current sum-of-parts estimates.
The research house revised earnings forecasts slightly higher for FY27F and FY28F by two per cent and six per cent respectively, reflecting stronger data centre rollout and Ranhill contributions. It added that the higher target price implies a FY28F price-to-earnings multiple of 16 times, which it considers justified given improving earnings visibility from the data centre segment and stable utility income streams.
As of 11.40 am, YTL Power’s stock price gained 5.50% to RM4.41.
