Hong Leong Investment Bank (HLIB) has maintained its BUY call on YTL Power International Bhd (YTL Power) and raised its target price to RM8.08 from RM7.58, citing growing upside from data centres, artificial intelligence infrastructure and the group’s re-emergence in power generation.
HLIB said management has identified data centres and AI as key growth pillars, with YTL Power doubling the targeted capacity of its Kulai data centre hub to 1.2GW.
Of this, about 300MW has been secured, including 150MW already operational, while another 200MW is pending contract finalisation.
YTL Power has also acquired 145 acres at Sedenak West, where infrastructure is ready to support another 1.2GW, bringing the group’s total potential data centre capacity to 2.4GW. It is continuing to look for additional land to support further expansion.
As at June 2026, the group had invested RM10.6 billion in its data centre operations, including RM2.1 billion financed through syndicated bank loans.
HLIB said YTL Power is also pursuing a RM15 billion sukuk programme and has earmarked 2027 for a potential data centre IPO to help fund its expansion.
The research house values YTL Power’s data centre segment at RM41.2 billion, based conservatively on 500MW of capacity, potential EBITDA of RM2.2 billion and a 20 times enterprise value-to-EBITDA multiple.
HLIB said industry checks continue to point to strong demand, with newly developed capacity being quickly taken up.
YTL Power is also expanding its AI infrastructure through its position as an NVIDIA partner.
Through Yes, the group currently has about 20MW of AI-GPU capacity deployed and is in discussions to increase this to 100MW or more.
HLIB said the infrastructure could support YTL Power’s own AI requirements while potentially allowing the group to offer GPU-as-a-Service.
The research house has yet to assign a separate valuation to the AI business but believes it could become increasingly meaningful as capacity scales.
HLIB also highlighted YTL Power’s procurement of seven Siemens SGT-9000HL gas turbines, with combined capacity of 5,250MW and deliveries scheduled between 2027 and 2032.
The research house said the move was strategically important given Malaysia’s requirement for additional generation capacity and the global shortage of large gas turbines.
The procurement could position YTL Power to re-emerge as a major independent power producer and potentially strengthen its position in securing Energy Supply Agreements required to support its growing data centre footprint.
Its water business provides another source of growth.
HLIB said Ranhill is positioned to benefit from the restructuring of Johor’s water sector and rising demand from data centres and industrial development. The research house estimates a fair value of RM4.20 per Ranhill share, excluding potential earnings from three proposed water treatment plants worth RM3.5 billion by 2030.
HLIB left its earnings forecasts unchanged for now but said further data centre contracts, AI-GPU expansion, new power projects and water concessions could provide meaningful upside beyond its current assumptions.
Its RM8.08 target price is based on a 10% discount to a revised fully diluted sum-of-parts valuation of RM8.98.
