KUALA LUMPUR: YTL Power International Bhd (YTL Power) can still maintain a dividend per share (DPS) payout of 5.0 sen, despite the massive capital expenditure (capex) needed for its upcoming data centre park, which will likely cost around RM10 billion to RM12 billion, Affin Hwang Capital said.
Affin Hwang said this provided that the data centres would be built in phases and YTL Power still has a cash balance of around RM6 billion on its balance sheet.
It said YTL Power intended to develop the 664 hectares it recently acquired into a data centre park, with 300 megawatt (MW) of green data centre capacity and 500MW of solar power by 2030.
"We believe that YTL Power's intention in acquiring Dodid Pte Ltd is to leverage on their expertise in the development of green data centres, as they currently own a 12.5MW Tier 3 data centre in Singapore.
"Management intends to secure long-term anchor tenants for these data centres before they start building. We believe that this could also help YTLP to secure better financing terms and reduces the cash outlay," it said in a note today.
However, Affin Hwang said it had yet to factor in any preliminary earnings or value contribution from the development, as YTL Power had yet to sign up sufficient anchor tenants to kick-start the project.
Affin Hwang said YTL Power was forced to seek new avenues for future earnings growth, as more countries had started to put in place a timeline to achieve net zero on carbon emissions, demand for conventional coal-fired power plants is on the decline.
"Major financing countries such as Japan, South Korea and China have also indicated that they will stop providing loans to new coal-fired power plants.
"Hence, there is a high likelihood that YTL Power's 80 per cent-owned 1,320MW Tanjung Jati A coal-fired power plant in Indonesia is unlikely to achieve financial close in the near term," it added.
Affi Hwang has maintained its "Hold" call on YTL Power with an unchanged target price of 66 sen.