KUALA LUMPUR: All eyes are on the delivery of YTL Power International Bhd's artificial intelligence (AI) data centre in Johor, after its recently concluded second quarter earnings.
Kenanga Investment Bank Bhd (Kenanga Research) said the Blackwell Nvidia chip housed in the AI data centre is scheduled to be delivered in the first quarter of 2025 (Q1 2025).
Despite its second quarter results being on track, YTL Power continued to experience a decline in PowerSeraya's earnings.
The turnaround of its telcommunication unit was also mainly due to construction profit from the RM950 million Sabah Point of Presence (PoP) project for laying of fibers over three years.
"Wessex Water's turnaround in Q4 2024 was largely due to a higher tariff rate which came into force in April over the next 12 months before a new tariff is set for the new regulatory period commencing April 2025. As such, the United Kingdom (UK) unit is expected to remain profitable in financial year 2025 (FY25)," said the firm in a note.
Wessex Water is YTL International's water and sewerage services company in the UK.
The utilities sector's earnings performance during the recently concluded second quarter of current year 2024 reporting season was remarkable, with three companies exceeding its expectations and two others meeting them.
Tenaga Nasional Bhd came out on top, driven by plant efficiency, which boosted earnings as electricity sales reached another record high.
This was followed by Gas Malaysia Bhd which benefited from improved retail margins as average selling price (ASP) rose, while Malakoff Corp Bhd surpassed forecasts due to strong power generation earnings.
Kenanga Research upgraded its call for the utilities sector to "Overweight" following its recent upgrade on TNB to "Outperform".
It said TNB is a long term beneficiary of the influx of foreign direct investment to build data centres in the country.
"In all, we continue to like the sector for its earnings defensiveness and resilience backed by regulated assets that generate recurring cash flow to anchor decent dividend yields of up to six per cent," it said.