This article first appeared in The Edge Malaysia Weekly on June 3, 2024 - June 9, 2024

YTL Power International Bhd’s (KL:YTLPOWER) 100% jump in valuation on the account of its data centre business is phenomenal. The company’s market capitalisation was hardly RM20 billion at the start of the year. Now, it is almost RM40 billion.

The YTL data centre story is supported by its tie-up with Nvidia. Analysts believe the partnership gives YTL Power the edge over others.

However, other property players are fast catching up. Many big players have taken the plunge into the data centre business and have garnered the attention of analysts.

For instance, one analyst has upgraded Mah Sing Group Bhd (KL:MAHSING) after it teamed up with Bridge Data Centres Malaysia V Sdn Bhd (BDC) to develop data centre facilities in its development in Bangi. The upgrade was on the grounds that the data centre business would add to the property developer’s recurring income by the end of next year.

Mah Sing is not the only property player in town that has ventured into the data centre business. This week, Sime Darby Property Bhd (KL:SIMEPROP) and UEM Sunrise Bhd (KL:UEMS) both announced their ventures into the DC business.

The end user for Sime Darby’s data centre is Google while UEM Sunrise announced a partnership with Logos Infrastructure Holdco Pte Ltd to develop a data centre campus in Gerbang Nusajaya, Johor.

Last month, Paragon Globe Bhd (KL:PGLOBE) announced the disposal of 47.9 acres in Johor to Bridge Data Centres Malaysia IV Sdn Bhd for RM238 million cash. BDC is linked to ByteDance, the major shareholder of TikTok.

Crescendo Corp Bhd (KL:CRESNDO), which is another Johor-based property developer, had sold parcels of land amounting to some RM445 million in that state to Microsoft for the US-based company to build data centres.

More property players are likely to jump on the data centre bandwagon. Like all previous themes, the buzzwords — exponential growth potential — will send share prices sky high, as will the valuations.

Hence, mind your risks when taking your bet on data centre theme play.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.