• Keep BUY and MYR6.68 TP, 35% upside and c.2% FY25F (Jun) yield. Post a site visit, we remain positive on the potential of YTL Green Data Centre Park, as evident by its continuous expansion plans. The commercialisation of YTL Power’s first 48MW data centre (DC) is essential to establish a track record as a co-location provider. Meanwhile, YTLP is confident of securing Nvidia Corp’s chips by 1HCY25, and we could expect to see the first 20MW artificial intelligence-DC (AI-DC) ramping up next year.

• YTL Green DC Park visit. We recently visited the YTL Green Data Park in Kulai, Johor. The visit was hosted by YTL Data Centres (YTL DC) CEO Heng Wai Mun and his team. YTLP commercialised its first 8MW DC – contracted to Sea (SEA US, NR) – in May. Despite a relatively slow ramp-up by Sea, there is no major earnings impact to YTLP, given that co-location fees are based on take-up capacity rather than live capacity. Additionally, YTLP is still in talks with several potential customers on the remaining 16MW capacity, and there is still a potential for it to be configured into an AI-DC.

• 100MW AI-DC update. The first 20MW is at 70% completion and should be ready for server installation by year’s end. The remaining 80MW capacity is also still under construction and slated for a mid-2025 completion. YTLP is finalising the offtakers. While capex has yet to be disclosed and finalised, we estimate the capex for using GB200 chips for a 100MW AI-DC could be 30- 50% higher than our original estimate of USD3bn for H100 chips. YTLP is also confident of securing chip supplies on time by 1HCY25. As the server installations may take months to complete, we could expect to see the first 20MW AI-DC ramping up in CY25, with the entire 100MW AI-DC starting contribute meaningfully in CY26. The financing structure has also yet to be firmed up, but YTLP is looking at funding the equity portion internally – there is no intention to tap into the equity market for now.

• New phase under construction. There is another new DC phase under construction, hosting a 40+40MW capacity and adopting an air-cooling system. We believe this new capacity has been committed by a hyperscaler, with construction is likely to be completed by mid-2025. Vacant land is available for YTLP to construct solar assets – this is for the DCs to be co- powered with green energy in future. There are no requirements from the clients to supply green energy for the existing DCs, but we believe this could attract more DC investors to reduce their carbon footprints in the longer run.

• Stay BUY. While keeping our earnings estimates, our SOP-based TP is kept at MYR6.68 with the incorporation of a 2% ESG discount based on YTLP’s 2.9 ESG score vs the 3.0 country median. Downside risks: Weaker-than- expected plant performance and higher-than-expected operating costs.

Source: RHB Research - 18 Jul 2024