UBS had a direct stake of 0.44% in YTL Power and another 3.12% via Credit Suisse as of 30 June 2023.

UBS may adjust its investment portfolio after it fully took over Credit Suisse, no one knows whether it will pare down further stakes in YTL or increase stakes in YTL Power.

It does not matter, now local funds are big buyers of both YTL and YTL Power shares. Plus company share buyback and buying from Yeoh Tiong Lay & Sons Sdn Bhd, it should have strong support to share price.

@cwc1982, it shows that EPF has finally seen the deep values in YTL. I expect more buying from EPF in coming weeks, to gradually increase its holdings back to 5% level.

Yeoh Tiong Lay & Sons Sdn. Bhd. added 3.0 million shares in YTL Power on 31 May 2024, pushing its stakes in YTLP to around 65%.

That shows the confidence of the Yeoh family in the outlook of YTL Power.

Furthermore, YTL Power has got approval for up to 10% share buyback which will provide support to the company share price.

Based on records from CGS-CIMB, EPF started buying back YTL Corp shares by acquiring 1.2 million shares on 31 May 2024. That marked the first purchase by EPF after it pared down its stakes below 5.0% last year.

On the other hand, Yeoh Tiong Lay & Sons Sdn Bhd added shares in YTL and YTL Power yesterday.

@cwc1981, the latest target price for YTL Corp is as follows:

CGS - maintain at RM3.88
Hong Leong - had a fair value of RM3.33 on 25 April 24 but I have not seen any update after Q3

That's all I have.

@Jeffchang, I have the latest Hong Leong report that upgrades YTL Power to RM7.45.

Anyone who wants this report can pm me.

@jeffchan1901, thank you for your confidence in my analysis and in this stock.

The intention of my sharing in the last article last Thursday is to give a full picture of what is to come, from the various subsidiaries of YTL Power, and how the earnings projection may look like for the next few years from my perspective.

You will need to assess the possibility of YTL Power achieving the earnings as projected in my article. But I am confident those numbers will be achieved, after studying most of the recent analysts' reports, some of them were issued after meeting the top management of YTL Power.

I am glad to see that many of the analysts are convinced with the bright earnings outlook of YTL Power and have given a 12-month target price of over RM6.00. Only one or two is still skeptical of the potential of YTLP's AI data centre business.

These analysts have more resources than us retailers and often have access to information faster than us. You should pick those analysts who are non-biased and professional such as Hong Leong, Macquarie, CIMB, CLSA & Ambank. Maybank is biased and in some way conflicted as it is advising YTL Power on the MTO of Ranhill.

You should try to study as many reports as possible and compare with my notes, then come out with own assessment to see if YTL Power at current stage still suits your investment needs.

I always advocate for long term investment to reap the maximum returns. Some real examples recently to illustrate my point:

-Had we taken profit at RM1.30 level (when Singapore introduced TPA last July), we would have missed the subsequent powerful rally to RM2.00
- Had we taken profit at RM2.24 when it hit twice and retreated to RM1.88, we would have again missed out on the subsequent rally to RM2.54 by end of 2023
- Had we taken off profit at RM3.50 when YTLP rallied up by 40% from RM2.54 in 4 days in early Jan 2024, we would have missed out the subsequent push to RM4.20
- Had we taken off profit at RM4.20 level but didn't buy back when it retreated to RM3.60-3.80 level, we would have missed out on the recent rally to RM5.46.

Now I presume many have taken some profit at good prices above RM5.00 to 5.40, you need to assess the possibility of YTL Power scaling new highs again in near future. You will never know what sort of good news may come and when it will be announced.

Based on my earnings projection and if I apply a PER of 12x and 15x, I expect YTL Power share to trade up to:

2024 - EPS of 39 sen x 12-15 = RM4.68 - RM5.86
2025 - EPS of 46 sen x 12-15 = RM5.52 - RM6.90
2026 - EPS of 60 sen x 12-15 = RM7.20 - RM9.00
2027 - EPS of 66 sen x 12-15 = RM7.92 - RM9.90
2028 - EPS of 80 sen x 12-15 = RM9.60 - RM12.00
2032 - EPS of 92 sen x 12-15 = RM11.04 - RM13.80

By 2028, YTLP's earnings will match or surpass Tenaga's numbers, and if the market decides to give a higher PER like 20x to 25x given to Tenaga, then you know how high YTLP share may go.

The share price in the long run will always follow the earnings trend, as earnings increase over the year, the share price will follow.

You can see how the share price of Nvidia has moved in tandem with its earnings. Before Nvidia announced Q1 FY2025 in early May 2024, its share price was hovering around US$900. Just after Nvidia announced the strong Q1 that beat expectations, the share price has since jumped up 26% to as much as US$1,140 per share.

YTL Power share was punished immediately after it announced Q3 FY2024 result that was weaker than Q2 FY24 but stronger than Q3 FY2023. What I can tell you is that Q3 FY2024 was just a temporary setback, given the weakness in PowerSeraya earnings (due to gradual roll over of high margin retails contracts and slightly weaker power demand) was not covered by a rebound in Wessex' and Yes 5G's earnings in time.

Looking forward, I see Q4 FY2024 to be stronger than Q3 FY24 mainly due to expected earnings rebound from Wessex after its 12% water tariff hike since 1st April 2024 and maiden contribution from the 1st phase data centre with SEA Ltd.

Looking further ahead, I see much stronger earnings growth in FY2025 and FY2026 as the AI data centre starts to contribute earnings from early 2025.

I am not sure about you, but I see compelling reasons to hold onto my YTL Power shares to 2028 when I am confident of getting another 100% gain in share price, or to 2032 when I expect to get another 80%-100% gain.

@Jaden993, sent you the docs in i3 messenger

Genm registered improved performance from all three regions: Malaysia, UK and US with adjusted EBITDA totalling RM810 million.

It was impacted by a non-core forex loss of RM130m in this quarter, hopefully non recurring.

US division (Resorts World New York City and Bahamas) registered improved EBITDA of RM153 million in Q1 FY2024, annualised to RM612 million.

Genm had total USD loan of about RM8.0 billion as of 31 Mar 2024. Assuming average interest rate of 4.5%, I estimate annual interest expenses to be RM360 million. Cash tax expense would be minimal given that the US divisions were at pretax loss after depreciation charge. So operating cashflows for US division would be about RM612m - RM360m = RM252 million a year.

This reaffirms my earlier view that RWNYC was cashflow positive to the tune of US$50m a year.

True that Genm had a higher loss from share of results from associates (mainly from US Empire Resorts), the loss was only RM5.8m higher for a much larger equity stake of 89.6% from 76.3% earlier. If we add back non-cash depreciation charge, EMpire Resorts was indeed EBITDA positive and most probably cashflow positive too. This also strengthens my earlier claim that the latest injection of US$100m by Genm into Empire Resorts would not be a bad thing. That would have helped Empire Resorts to save interest expenses and to break even sooner.

Though Genm had a higher loss from

IOIPG registered an excellent set of results for Q3 FY2024 with net profit of RM220 million, almost double of last year corresponding period.

Though this quarterly result was boosted by a land sale in Johor, but that was considered part and parcel of property development for IOIPG who still has some 5,448 acres of land in Johor.

Can't find you in i3 messenger, Edison Cheah.

you try to pm me then I will send you the pdf file

Key division performance is as expected with the bulk of the earnings contributed by Genting Singapore, and slightly improved EBITDA from Genm but slightly lower EBITDA from UK and US divisions compared to Q4 FY2023.

The key swing factors in Q1 FY2024 compared to Q4 FY2023 are:
- absence of a disposal loss that improved PBT by RM69.9m in Q1
- lower impairment losses by RM51m
- the last item called Others that swang from a loss of RM95m in Q4 FY23 to a gain of RM138m in Q1 FY24

These 3 items contributed additional PBT of RM350 million in Q1 FY2024 compared to Q4 FY23. But a higher loss by RM55m in Investments & Others (due to provision in Genm for forex loss) reduces this impact to RM300m pretax.

Overall performance is commendable and this shall set the tone for following quarters.

If this momentum continues, Genting may well register total EPS of 60 sen for FY2024.

How much shall the share price be? I would argue for a PER of 15x or RM9.00.

@Abcdefg123456789, I can pm you the pdf file. You pm me first if you want.

@Goldberg, thanks for the sharing of the article above.

That summarises the strength of YTL Power in the development of AI data centres in the region - a captive 500MW solar power supply, and now a majority stake in the sole water supply company in Johor to ensure adequate and fast connection of water supply to the new data centres.

Thanks Goldberg for the updates.

It is indeed a strategic move by YTL Power to strengthen its hold onto Ranhill, as it looks to expand on its data centre business in Kulai.

After the premature selling last few days after one weak quarterly result, more short term traders have been flushed out and I hope YTLP shares can have a steady rise in coming weeks to new highs.

Good deal for YTLPower to buy over Hamdan's stakes in Ranhill at RM0.995.

This will solidify YTLP's shareholdings in this Johor water company to above 50%.

Look forward to big improvements in Ranhill financials after the take over. Another earnings accretive deal for YTLP, which will ensure good profits from the water company for generations to come.

The next catalysts will be:
- sustained strong profits from PowerSeraya in Q4 FY2024
- turnaround of Wessex Waters in Q4 FY2024
- secure more big clouds customers for its AI data centres in next few quarters
- launching of digital bank
- turn around of Yes 5G in 2025
- secure more customers for its co-location data centres after SEA Ltd or SEA to take up more space after the initial 48MW
- financial close for KL WTE project
- meaningful contribution from UK Brabazon property project from FY2025
- financial close for PowerSeraya new 600MW hydrogen-ready CCGT
- other earnings-accretive M&A activities
- corporate exercises like new IPO listing to unlock value of assets

@observatory, I do not have a spreadsheet for AI data centre project, as I only aimed to calculate the potential net profit contribution to YTL Power.

I assumed a product cycle of 3 years, after which YTLP would re-invest in the newest technology chips and lease out for another 3 years. This is similar to what Macquarie analyst has assumed.

@emsvsi, the equity IRR would be very high as typically AI data centre developers look to get back all returns within 3 years, as the product life of GPUs is short.

I didn't calculate the IRR but you may refer to CLSA or Macquarie reports for reference

@observatory, I had also struggled for a while on the capex figure until I read CLSA report on YTL Power. Apparently, not all the power requirement for AI data centre is for powering the GPUs, CLSA report said about 67% was for GPUs and the rest for cooling & others. In my calculations, I have assumed 67.5% of power for GPUs.

In your example above, for a 100MW AI data centre, the required number of H100 GPUs may be 100,000x67%/0.700 = 95,714

Assuming US$30k per H100 GPU, the required capex would be 95,714 x US$30k = US$2.9 billion close to the figure of RHB's US$3.0b.

@Edison Cheah, I expect PowerSeraya earnings for Q4 FY2024 to be similar to the RM700m achieved in Q3 FY2024. I expect the same level of quarterly profit to continue into 2026 then drop to S$600 million in FY2027 & FY2028 or quarterly net profit of S$150m or RM525m.

@cgtan2020, CGS's latest tp for YTL Power has been raised to RM5.50

CIMB raised tp for YTLP from RM4.47 to RM6.22

I just received RHB latest report on YTL Power where RHB raised target price from RM4.69 to RM6.68.

In valuation AI data centre, RHB analyst assumed 15x EV/EBITDA, total 60MW of AI data centre only, 14% project IRR, 60% stake and USD3 billion capex to come out with a valuation of RM18.5 billion.

Had he assumed a total of 200MW, the valuation would balloon to RM61.7 billion !

You can see my assumptions are more conservative than some of the analysts, eg. I assume a leasing rate of US$2.50/hour per GPU compared to US$3.42/hr per GPU assumed by Macquarie and US$3.00/hr per GPU assumed by CLSA.

I have assumed a total of 200MW of AI data centres to be commissioned by mid 2027, while Macquarie has assumed a total of 300MW while CLSA has assumed a total of 150MW AI data centres.

DCF valuation is a good method to value the AI data centre business but one needs to have sufficient data for a DCF valuation. The AI data centre is a relatively new business, and hence analysts struggle to come out with a proper valuation using traditional method like DCF or PER.

Hong Leong used a PER of 25x on projected FY26 earnings of AI data centres.
CLSA used 3x multiples of sales, or implied PER of 29x with reference to CoreWeave valuation.

Macquarie used DCF valuation for YTLP's AI data centre, by making many assumptions, including 100MW AI data centre in 2026, another 100MW in 2029 and another 100MW in 2032, US$3.42/Hour/GPU of leasing rate etc. The DCF valuation comes to RM50.5 billion for this total 300MW AI data centres, and RM30.3 billion for YTLP's 60% stakes. Again some would argue too high, but it all depends on assumptions made.

After studying the valuation and revenue calculations made by CLSA, Ambank and Macquarie, I decided to make my own calculations of potential revenue and earnings to be contributed by AI data centres to YTLP. You may challenge my calculations and assumptions made, but those are my assumptions based on indications from the company as well as from various analysts.

As to valuation method using the lettable floor space, I am not too sure if it is appropriate, as each data centre building design is different. For example, YTL DC1 is designed such that each of the 24 halls has space to accommodate 1MW more of data centre equipment if needed. That would immediately add 50% IT load to the floor space (from 2MW each hall to 3MW each hall).

Data centre buildings are not like commercial office space where we typically value it per square foot basis.

@observatory, thank you for your comments above, it helps to prompt for more studies into the valuation of data centre businesses of YTL Power.

Firstly, I will try to answer some of your questions on Hong Leong report.

On YTL DC valuation, Hong Leong used the valuation of the consensus target price for Keppel DC REIT to apply to a total of assumed 200MW of co-location data centres for YTL Power. I think it is quite fair as Keppel DC REIT is the only listed entity of regional co-location data centres, which are similar to what YTLP is developing in Kulai with SEA Ltd being the first customer.

Yes it may not be a like-to-like comparison as you said, but we also do not know how much of the ~300MW data centres of Keppel is in operation, how much has how many years of lease left and how much EBITDA margin for each. While YTL DC1 only has 1st phase of 8MW in operation for SEA, but the timeline for subsequent phases of 8MW in 2025-2026 are pretty much fixed. I cannot be sure of the total committed capacity by SEA, some reports say 36MW while others say 48MW. YTL DC1 can actually be expanded to 72MW by putting additional 1MW in each of the 24 halls in DC1, so I would expect SEA to gradually commit more after the 36-48MW.

I agree with you that it is not a good comparison with Keppel DC REIT but that is the only reference right now.

That's the reason I chose to estimate the potential earnings from the co-location data centres and assume gradual commissioning of the data centres up to 100MW in modules of 36MW each year by 2027.

For 36MW of co-location data centre, I assume capex of RM1.5 billion, 80% gearing, project cashflows of 15 years, project IRR of 15%, I get first year PBT of RM119 million rising to RM250m in year 15 as project loan gets paid off.

That's how I got the net profit projection of RM19m from co-location data centres in FY24 rising to RM200m in FY2027 as YTLP secures enough customers for a total 100MW co-location data centres. I feel this better reflects the earnings potential and valuation of co-location data centres for YTLP, which should add valuation to YTLP every year to 2027, rather than based on a lump sum at current year.

@klee, let's put this straight, I am not competing with anyone here in promoting this stock. Mr. OTB has my respect and he just happened to be promoting the same stock.

My intention of releasing this article was to give a full picture of the earnings potential of YTL Power in the long run, and hopefully those who were still holding the stock would not sell off just because of one weak quarterly result. But apparently the market was full of short term traders and investors with very short span of investment horizon.

I am not sure what Mr. OTB has done but it would not bother me, as he has his own followers to guide and answer to. My intention has always to discover undervalued gems and promote long term investment for 2 years to 10 years or beyond.

@Nickellee, well said.

In fact, I purposely release my article early yesterday to give enough hint on what to expect from Q3, but unfortunately the market has still over-reacted to one quarter of weak results.

Anyway, these short term traders and short-sighted retailers are selling their tickets to the foreign funds, as indicated by Macquarie analyst at noon, who called it a buying opportunity you have been waiting for with 50% upside to its target price of RM7.30.

This morning selling was from short term traders and short-sighted investors in a form of panicked selling. Actually the Q3 result was not too bad, earnings for YTL and YTL Power were much higher than last year corresponding quarter.

Coming quarters will be stronger for YTL Power and YTL, as Wessex Waters starts to break even in Q4 FY2024, and 1st phase data centre starts to contribute maiden earnings.

The AI data centre division will lead the way to another leap in earnings from FY2025.

Yes raymondroy, PowerSeraya still delivers solid earnings like a fixed deposit.
Unfortunately the market is full of short term traders and short-sighted investors who are taking the weak Q3 result to take profit and punish the stock.

The long term prospects are very good, the current share price weakness is a good opportunity to accumulate for long term investment.

Good move to buy at RM4.80 or below.

It is good to flush out some short term traders and let the stock cool off a bit, before we can see slow and steady climb later.

Q3 was just a blip, coming quarters will be stronger

CIMB raises tp for YTL Power to RM5.50

MIDF raises tp to RM6.35

Only Maybank lowers tp to RM5.20

Hong Leong upgrades tp for YTLPower to RM7.55

Affin upgrades tp to RM6.45

Good upgrades, unbiased

@probability, I would expect the AI infrastructure (AI data centre) to be ready first before the big cloud like AWS could use it to provide cloud computing services. But it will be more or less the same timing, as I would expect big cloud like AWS will be able to secure customers months before the AI data centre is ready

Okay that's all for the Q3 update.

It is a temporary blip, and I am confident Q4 will be better as we shall see Wessex turn around and maiden earnings contribution from SEA data centre.

FY2025 and FY2026 will be even more exciting as AI data centres come into play.

Then come FY2028 we shall see another jump in YTL Power earnings when PowerSeraya's new 600MW hydrogen-ready CCGT enters into commercial operations from Jan 2028.

Not much surprise from YTL Q3 result, another beat compared to last year, though slightly lower than Q2. It was dragged down by a lower earnings contribution from PowerSeraya but the net profit of RM700 million from PowerSeraya was considered very good. I expect this to continue well into 2026.

Cement division registered an excellent 70% increase in PBT compared to last year.
Hotel division made a bigger jump of 115% in PBT compared to last year.

These two are the positive surprise.

9 months EPS comes to 29 sen, annualised to 39 sen which should meet my projected earnings of RM3.2b for FY2024.

Going into FY2025, we can expect some small profit contribution from Wessex after the water tariff hike from April 2024, steady earnings contribution from PowerSeraya, Jawa Power and Jordan Power, maiden earnings contribution from UK Brabazon property project, RE export to Singapore, co-location data centre with SEA and 6-month contribution from AI data centre. I estimate these should help to push for higher earnings of YTL Power to about 46 sen of EPS in FY2025.

At current price of RM5.38, YTL Power is trading at undemanding forward PER of just 11.7x.

Given the strong operating cashflows, it is not a surprise that the interim dividend is higher at 3.0 sen, compared to 2.5 sen last year.

Total borrowings remained at RM31b as of 31 Mar 2024 but cash holdings increased by RM400m to RM5.4b.

Operating cahsflows before capex and working capital changes increased to RM4.0 billion in 9 months of FY2024, annualised to RM5.3 billion which will be sufficient to meet capex requirements.

Capex totalled RM2.6 billion in the 9 months.

Investment Holding Activities are contribution from Jawa Power, Jordan Power and also data centre division. As the 1st phase data centre with SEA Ltd was completed in late March 2024, so earnings contribution from data centre division to YTL Power should be negligible in Q3.

This means that Jawa Power and Jordan Power have contributed higher earnings of PBT RM150 million in Q3 from RM125m in Q2. This is encouraging, just as what I projected in my article for Jordan Power to register higher earnings every year as the project loan gets gradually paid off (hence lower interest expenses), and higher generation due to natural gas supply disruption in Jordan.

Yes 5G division continues to disappoint with a larger loss of RM123m in Q3. Ground checks in Ipoh show that Yes has not been as aggressive as Maxis and CelcomDigi in attracting 5G subscribers with less promotion activities and a lot less representative shops. It does look like it will take longer time to break even, and I may have to allow some losses in FY2025 (currently I assume it will break even in FY2025).

Wessex continued to bleed in Q3 with slightly smaller loss compared to Q2. This is so as UK inflation eased further in Q3 compared to Q2 and hence provisions for index-linked bonds were lower in Q3.

UK just announced CPI of 2.3% for the month of April 2024, the lowest in more than a year. Hence I will expect provision for index-linked bonds to be smaller going forward, which will help to turn around Wessex sooner.

Wessex has already gotten water tariff hike of 9+% from 1st April 2024, so I expect Wessex to register a small profit of RM30-40 million in this Q4 FY2024.

YTL Power registered a decent set of results for Q3, though net profit of RM700m is lower than Q2 & Q1 when PowerSeraya was benefitting from high wholesale pool prices and some high margin retails contracts.

As I have earlier pointed out, I expected PowerSeraya net profit to be about S$180m to 200m per quarter. In this Q3, PowerSeraya contributed PBT of RM843m or net profit of RM699m = S$200m which was at the top end of my estimate.

Given that USEP in Singapore has already rebounded in mid March from a low in Feb, I expect such net profit of S$180m-200m per quarter for PowerSeraya to continue well into 2026.

I have in my latest article posted this afternoon projected a total net profit contribution of RM3.0 billion from PowerSeraya in FY2024. Now we have 9 months net profit of RM2.4 billion (PBT of RM2.9b x 83%) already from PowerSeraya, so if we have another RM700m of net profit from PowerSeraya in Q4, then full year net profit contribution may beat my estimate of RM3.0b for FY2024.

For FY2025, I have projected a net profit contribution of RM2,625m or S$750m from PowerSeraya. PowerSeraya was doing S$200m in this Q3 and I would expect this to continue in following quarters as there is no new capacity coming in before 2026. So PowerSeraya is likely to beat my projection for FY2025 as well.

Though there may be positive surprise in YTL and Mcement earnings tonight, judging from the last minute buying of both stocks.

Tomorrow we shall see other analysts' update reports.

@pang72, I don't think there will be any negative surprise in upcoming results tonight as most of the business divisions are performing well as expected.

I don't think I will need to update on every quarterly result going forward, perhaps on any new development or when AI data centre division starts to contribute earnings next year.

@cktay, I can understand your frustration, same over here. I have been holding Genting shares for more than 2 years but I accumulated some early during Covid times so my entry cost is around RM4.00.

Genting share price has been affected by negative perception of its related party transactions and top management corporate governance issues. But I think as long as the company fundamentals are intact with growing earnings outlook, the market will eventually give it a fair re-rating. Patience is needed to reap this reward.

https://klse.i3investor.com/web/blog/detail/dragon328/2024-05-23-story-h-161458128-YTL_YTL_Power_The_Best_Performing_Stocks_May_Again_Double_Up_in_AI_Driv

For leisure read. You may consider gaining some exposure to the parent YTL

https://klse.i3investor.com/web/blog/detail/dragon328/2024-05-23-story-h-161458128-YTL_YTL_Power_The_Best_Performing_Stocks_May_Again_Double_Up_in_AI_Driv

Both YTL and YTLP shares and earnings will be driven by AI data centres in next few years

https://klse.i3investor.com/web/blog/detail/dragon328/2024-05-23-story-h-161458128-YTL_YTL_Power_The_Best_Performing_Stocks_May_Again_Double_Up_in_AI_Driv

My latest estimates of YTLP earnings for next few years