KUALA LUMPUR (Oct 30): MBSB Research remains positive on YTL Power International Bhd’s (KL:YTLPOWR) longer-term growth prospects, underpinned by the ramp-up of its data centre operations in Kulai, Johor, the planned expansion into Sedenak Tech Park West (STeP West), and rising opportunities in the power and digital infrastructure sectors.
The research firm also sees the group’s joint venture (JV) with SD Guthrie Bhd (KL:SDG) and Bumi Assets Sdn Bhd to develop land in Bukit Kerayong, Selangor, as a potential strategic milestone that could significantly expand its development pipeline over the longer term.
MBSB Research maintained its earnings forecasts and “buy” recommendation on YTL Power, with a sum-of-the-parts-derived target price of RM5.98, pending greater clarity on the proposed development.
"Our target price implies an FY2028 price-earnings ratio (PER) of 22.1 times. At its current share price, YTL Power is trading at 19.6 times FY2028 PER, which still offers an attractive entry point, in our view. We continue to favour YTL Power for its strategic expansion into data centres, which are emerging as a new growth driver for the group," the research firm said in a report on Friday.
YTL Power has entered into a JV with SD Guthrie and Bumi Assets to develop a 657.09ha freehold site at Bukit Kerayong Estate, which is currently used for oil palm cultivation.
The development will be undertaken through JV company Bukit Kerayong Industrial Developments Sdn Bhd (BKID). YTL Power and Bumi Assets each hold a 35% stake in BKID, while SD Guthrie owns the remaining 30%.
Although BKID has reportedly proposed an integrated industrial development for the site, MBSB Research does not rule out the possibility of a large-scale data centre campus being developed there, potentially exceeding the scale of YTL Power’s existing green data centre park in Kulai.
"Assuming approximately 500 acres are allocated for data centre development, we estimate that Bukit Kerayong could theoretically accommodate up to 4GW of capacity,” MBSB Research said.
YTL Power shares rose two sen or 0.38% to close at RM5.32 at Friday’s midday break, valuing the group at RM46.75 billion. The stock has gained 59.76% year to date.