KUALA LUMPUR: RHB Research maintains a buy call on YTL Power International Bhd as it is optimistic on the potential Johor thematic play arising from its future development of data centre (DC) and solar assets in Kulai.
"We expect more data centre deals upon the successful delivery of the Phase 1 project and expedition of solar assets riding on the implementation of the National Energy Transition Roadmap (NETR)," it said in a note today.
For Phase 1, YTL Power is investing RM1.5 billion to build a Tier-III certified facility equipped with the ability to accommodate up to 72MW of capacity.
The 3-storey building consists of two wings of Data Hall suites and mechanical & engineering (M&E) rooms and also eight Data Hall suites spread over two wings per floor (total of 24 Data Hall suites). Sea (SEA US, NR) will be the anchor tenant for the 32MW (out of the 48MW) IT load hyperscale DC.
Construction is ongoing and the first 8MW is expected to be put on stream by 1QCY24 and the remaining 24MW to come online progressively.
YTL Power is looking to secure a new client for the remaining 16MW.
"We are guided that the contract tenure is more than 10 years and the DCs in Phase 1 could potentially generate PBT of RM100 million," said the research house.
It expects more potential DC deals upon the successful delivery of the Phase 1 project.
Meanwhile, although the DC's electricity is currently supplied by Tenaga Nasional, as of now, RHB is of the view that YTL Power is likely to construct solar assets for the DCs to be powered in the future with green energy from its solar farm.
"This could attract more DC investors in the longer run. Any excess solar energy, if any, could be sold to the grid too," it added.
RHB maintained a buy call and raised its target price to RM2.43 from RM2.21.
YTL Power is an independent power producer (IPP) with a presence in Malaysia and Singapore and water and sewerage services in the UK.
It has also ventured into the provision of internet services in Malaysia.
At the time of writing, YTL Power share price rose 3.71 per cent or seven sen to RM2.15.-ends-