@xiaochen, I am no expert in AI nor data centre, we can all learn together.

I am more inclined to think that the RM20b investment is related to the AI data centre deal with Nvidia alone.

The original RM15bn investment was based on the initial RM1.5b investment for the first phase of 48MW with SEA Group for traditional data centre.

Now with AI data centre deal with Nvidia, the total investment for the Kulai park will need to be revised upwards.

@MrFox, when I projected last year that PowerSeraya could earn a pretax profit of SGD200m to 230m a quarter, people laughed and not many believed.

But the numbers speak for itself, PowerSeraya made a pretax profit of over RM1.0 billion in the most recent 2 quarters. It is going to make more in this Dec quarter.

We don't know much about this AI data centre deal, only some big figures floating around. But we cannot discount the possibility that this may become another significant earnings contributor to YTL Power in years to come.

It is by no mistake Nvidia market cap is over USD1.0 trillion and YTL Power market cap has expanded by over 240% YTD. They are both led by visionary chieftains and capable management team.

Just a wild guess, at 15% ROI, this AI data centre deal with Nvidia could potentially generate pretax profit of 15% x RM20b = RM3.0 billion a year when fully developed.

The earnings contribution from the data centre business segment would be as high as PowerSeraya later. Exciting times indeed!

@xiaochen, it is possible for this deal alone with Nvidia to hit RM20 billion. Here is why I think it is possible.

It is not fair to use the cost of building super-computers alone to compare to AI data centres which contain supercomputers, storage equipment and chips, AI cloud computing equipment and softwares, and lots of Nvidia H100 GPUs.

An online check shows that one H100 GPU can cost up to RM350,000 each. One rack of 8 x H100 GPUs requires 6 x 3,300 watts (or 20kW) of power supply. The proposed AI data centre deal by YTLPower with Nvidia would require thousands of Nvidia H100 GPUs and easily 50MW of green power supply, I estimate.

Based on the most recent deal on data centres, in which Singtel sold a 20% stakes in its regional data centre business to US KKR Group, it valued Singtel's data centre business at S$5.5 billion or almost S$30 million per MW of data centre based on my calculation.

Now AI data centres are much more valuable than traditional data centres which are used to store data, garbage or useful data. AI data centres can process raw data and turn it into useful data. I estimate AI data centres should be valued at at least 30% premium to traditional data centres.

Even if I stick to S$30m/MW, a 50MW AI data centre would be worth S$1.5 billion or RM5.25 billion. A 30% premium would value it at SGD2.0 billion or RM7.0 billion.

The proposed collaboration with Nvidia is for a long term period of easily 8 to 10 years which is the typical duration of data centre leases. So we cannot rule out the possibility that over the next 8-10 years, YTL-Nvidia will be able to find more customers for their AI data centres to the tune of 150-200MW capacity (note that YTLP Kulai green data centre park still has spare capacity of over 250MW left).

So total investments could easily hit RM21b to RM28 billion over next 8-10 years.

As AI data centres are the new thing high in demand now, I guess the return on investment ROI would be at least in the high teens.

Genting Singapore EBITDA exceeded SGD 350 million in the latest quarter ended Sept 2023, hence it has outperformed my earlier projection of yearly EBITDA of SGD1.4 billion (as stated in my earlier report in Jan 2023).

In the absence of any further lockdown, Genting Singapore earnings will only expand in coming years as it rolls out Sentosa 2.0 expansion till 2031. It is scheduled to add over 700 hotel rooms in next few years from current 1,600+ rooms, so a 43% expansion in next few years.

It achieved non-gaming revenue of SGD230 million in the latest quarter, annualised to SGD920 million. This non-gaming revenue is expected to increase by 40% or more in coming years due to the scheduled hotel room additions, or an increase of SGD400 million a year.

It achieved an EBITDA margin of 50% in the latest quarter, assuming the same EBITDA margin, its EBITDA is going to increase by another SGD200 million a year just from non-gaming segment alone.

If its gaming segment also increases by similar quantum, then total EBITDA may hit SGD1.8 billion in a few years time. Genting Singapore is still in net cash position with SGD3.3 billion of cash, so enterprise value would top easily 8 x SGD1.8b + 3.3 = SGD 17.7 billion.

At current share price of SGD0.99, Genting Singapore is worth 12.094b x SGD0.99 x 3.50 x 52.5% = RM22.0 billion to Genting. This is already higher than current market cap of Genting at RM18.22 billion.

This means investors are getting Genting Malaysia, Genting Plantation, Resorts World Las Vegas, and its oil & gas and power businesses for free!

@ValueInvestor888, I don't much more info on this Nvidia tie-up other than what you know, as details on this deal have been scarce.

I will just try to guess what the potential benefits for YTL Power.

First, it may be a joint investment by YTLP and Nvidia in new AI data centres which will be leased out to MNCs, just like the first phase of 48MW is leased to SEA Group on long term basis. The advantage YTLP will have is the access to Nvidia GPUs that are high in demand globally. And AI data centres are much more valuable than traditional data centres which are used to store all sorts of data only. AI data centres can process huge volumes of raw data and turn it into useful data.

Secondly, YTL Comms will provide cloud-based AI computing services, machine learning products, innovative AI cloud services, Malay-language versions of cloud-based AI products. Potential customers are government agencies and MNCs.

As I wrote in my last article, traditional data centres are valued currently at around SGD30 million/MW, as witnessed at the recent Singtel's disposal of 20% stakes in its regional data centre business to US KKR Group. I guess AI data centres are easily valued at 30% premium to traditional data centres. Even if I take the benchmark of SGD30m/MW, a 50MW AI data centre will be valued at minimum SGD1.5 billion.

@KLV868, it is just a dual listing in Japan for YTL. It is exactly the same company and same assets, it is just that some % shares are listed in Japan to raise local money.

It is just like TopGlove which wanted to do a dual listing in Hong Kong for 10% of its shares some 2-3 years ago. It is mainly to get a higher valuation and to raise local money.

Nothing much to shout about my record. I did suffer paper losses with Genting earlier this year and cut loss on AEON. What I do is just to hold longer than others.

The new developments at YTL Power have been faster than what I expected few months ago.

Firstly PowerSeraya earnings have beaten my own bullish projections.
Secondly, Wessex Waters proposed capex for next regulatory period is much higher than I expected, and its quarterly result has turned around (as seen in latest Sept qtr) much quickier than the market thought.

Thirdly, YTLPower has accumulated over 20% stakes in Ranhill Utilities which have a champion asset in the water concession in Johor and power plants in Sabah

Forthly and the most significant one, YTLPower has collaborated with Nvidia in a tie-up for AI data centre projects at its Kulai data centre park. This is potentially an earnings explosion, the impact of which has not been appreciated much by local investors and analysts. But eventually foreign funds will know and value it properly.

Dear Mr. OTB, you are most welcome. I have not done much, it is your own analysis and faith in your own decision to have stayed invested in YTL Power until now. Applaud yourself.

Singapore dollars surged to almost RM3.60 yesterday before settling above RM3.50.

If this momentum continues to the end of this month, we can expect another set of stellar earnings contribution from PowerSeraya for this Dec quarter

Of course, the key driver for Genting today is the interest rate pause by US Fed yesterday and the projected 3 interest rate cuts for 2024 as signaled by Powell.

Genting finally breaks up RM4.70, patience has paid off.

Singapore dollars surged to a high of RM3.5897 yesterday before settling at RM3.5016 making a new record high against the ringgit.

If this momentum continues to the end of this month, we can expect a record profit contribution from Genting Singapore for this Dec quarter which is seasonally a strong quarter

Singapore dollars surged to a high of RM3.5897 yesterday before settling at RM3.5016 making a new record high against ringgit.

If this momentum continues to end of this month, we can expect another set of stellar earnings contribution from PowerSeraya to YTL Power.

@harvest6138, though this news is few months old but it is still correct in the sense that water companies in the UK have all submitted their aggressive capex plans for the next regulatory period from 2025-2030. In returns, water companies are asking for substantial REAL increase in water tariffs to compensate for the substantially higher capex required to fix the various flooding, sewerage and environmental issues there.

Wessex Waters have asked for a 30% increase in REAL water tariffs for 2025-2030, if approved the nominal increase in water tariffs will likely be higher than 30% given inflation adjustments every year going forward.

Ya, RM6.95 will definitely come, it is just a matter of time. Be patient.

I bought in Genting up to RM5.00 early this year but didn't feel depressed at all when its share price dropped to RM4.00. Instead I added more as I strongly believe Genting will soon break up RM5.00 soon. It is grossly under-valued now.

Its stakes in Genting Singapore is higher than its own market cap now, it means investors are getting the Genting Malaysia business, Genting Las Vegas, Genting Plantation, oil & gas business for free!!

@ChloeTai, no need to feel depressed. Have faith and you will be rewarded handsomely.

Genting will have its turn for a great rally. Genting Singapore broke up SGD1.00 this morning, investors are slowly waking up to the huge potential of its expansion programmes Genting Sentosa 2.0.

Another new high!

Those who read my article last week to buy a ticket and get on the YTL train are now sitting pretty on 20% paper gain. Just sit back and relax to let the journey continue.

But don't chase high, always aim for long term investment holds.

@Agjl, well said, fully agreed.

We are all here to make decent money from investments with our hard-earned money.

Have faith and hope Christmas come early to all!

https://www.edgeprop.sg/property-news/luxury-ski-chalets-prices-have-gone-44-highest-2014?utm_source=WeekdayEDM&utm_medium=email&utm_campaign=FREE

She adds that Niseko remains the top choice for skiing destinations in the Asia Pacific due to its location proximity, world-renowned powdery snow, year-round resort, retail, world-class restaurant amenities, and favourable dollar-to-yen exchange rate.

@keyman, that's right as YTL YTLPower have shown good progress in earnings rebounds and new projects, while Genting results had been disappointing until the recent Sept 2023 quarter, so it is just a timing issue.

My other stocks have mixed performance too, like BPlant is being taken over so no more upside but I have got close to 100% gain there. IGBB is doing well with share price touching year high, already up over 60% since I first recommended in Aug 2022. I have given up on AEON as the management does not seem to be proactive enough.

Now Genm Genting may see good catalysts ahead.

UK house prices rose for the second month in a row, according to one of
Britain’s biggest mortgage lenders, in a further sign that a lack of properties
for sale and cheaper borrowing costs are underpinning the property market.
Halifax said the average value of a home rose 0.5% in November to £283,615
(RM1.32mn), following an upwardly revised 1.2% gain in October. It left prices just
1% lower than a year earlier and roughly 3.5% below where they peaked in 2022.
(Bloomberg)

This is good for YTLPower's Brabazon property projects in Bath

The Bank of England will keep Bank Rate at 5.25% on 14 December and
through the second quarter of 2024, a Reuters poll showed, although a slim
majority of participants said risks were tilted towards the first cut coming
earlier than expected. British inflation cooled more than expected to 4.6% in
October from 6.7% in September yet economists as a group now expect only a
25 basis point cut in the third quarter compared to 50 basis points in a
November poll. (Reuters)

This will be good for Wessex Waters

Ya hopefully good news will keep flowing in for Genting in 2024, but a lot will also depend on whether the management will do the right things

@pang72, haha I have still been in the game since Jan. It is just that the market conditions were not ripe yet in 1H but I see great catalysts ahead for Genting.

Yes Genting Singapore will lead a higher growth in tourists receipts and earnings over next few years. As I forecast earlier, Genting Singapore would achieve EBITDA of S$1.4 billion for 2024. In the latest Sept 2023 quarter, it achieved EBITDA of over S$350 million, annualised to over S$1.4 billion better than my projection.

@KingKKK, seriously I do not know about the game plan of YTL on Ranhill. As they have got over 20% stakes, so YTL can equity account Ranhill's profits. Whether YTL will continue raising its stakes, I do not know but going by their long term investment strategy, YTL would typically try to get a controlling stake. How would they get there, I have no idea.

As for PBA, I am not familiar with its financials so no comment.

@Income, ya it is a bit long. If you don't have time, just read the First Boom & Second Boom then the last part.

The middle parts have been covered largely in my previous articles.

@Permutation, this is a tough question. I leave it up to you.

FYI, I have both stocks so I don't have to think hard to choose.

@pang72, MCement is definitely under-valued despite the recent run up. CIMB was quick enough to see the potential as demand for cement is picking up strongly from Malaysia and Singapore.

@Plantermen, thanks for the info. I am not quite familiar with KL city centre and have not been to TRX. Will explore later.

https://klse.i3investor.com/web/blog/detail/dragon328/2023-12-06-story-h-213241744-YTL_The_Growth_Story

For leisure read

https://klse.i3investor.com/web/blog/detail/dragon328/2023-12-06-story-h-213241744-YTL_The_Growth_Story

for leisure read

https://klse.i3investor.com/web/blog/detail/dragon328/2023-12-06-story-h-213241744-YTL_The_Growth_Story

Food for thoughts over lunch

https://klse.i3investor.com/web/blog/detail/dragon328/2023-12-06-story-h-213241744-YTL_The_Growth_Story

Food for thoughts over lunch

@Jonathan Keung, can you please share anything interesting in YTL management replies to queries during the AGM?

As @observatoty rightly pointed out, Wessex's RAB of 4.1bn pounds is funded by debt and equity. Currently the 3 listed water companies in the UK are trading at low valuation of 1.1x to 1.2x RAB. Hence it is reasonable for Hong Leong research to value Wessex at 1.2x RAB now.

Please note that water companies were trading at much higher valuation of 1.5x to 1.7x RAB few years back before COVID and before the high inflation / interest rates in the UK.

If we take the current 1.2x RAB, Wessex is valued at 1.2 x 4.1bn - debt 2.4b = 2.5bn pounds or RM14.6bn

I have suggested for Wessex to consider an IPO after 2.25 when inflation in the UK subsides and valuation may go up to 1.6x RAB. Then Wessex may be able to get a valuation of
1.6 x 4.5b - 2.7b (debt) = 4.5b pounds or RM26.1 billion

Just think about it, come 2030 when Wessex' capex plans get materialised, its RAB will expand to 8.0 billion pounds, and debts will increase to 2.4+2.7 = 5.1b. So at 1.6x RAB, Wessex equity value will expand to 1.6 x 8.0b - 5.1b = 7.7 billion pounds or RM44.7 billion

As for Wessex RAB expansion, it really depends on how much capex is approved by Ofwat and how much the company spends. And how much capex it spends depends on inflation in the UK to some extent.

FYI, Wessex has just submitted to Ofwat a capex plan of 3.5 billion pounds for the next regulatory period from April 2025- Mar 2030. Normally Ofwat will push back on water companies' capex programmes in order to lower the water tariffs, but in this round, Ofwat seems to be supportive of the water companies' capex plans as it faces criticism on sewerage overflow and flooding issues in recent months.

If this capex plan gets approved, Wessex will expand its RAB from currently 4.1 billion pounds to about 4.5 billion pounds by Mar 2025 then expand by another 3.5 billion to almost 8.0 billion pounds by Mar 2030.

Then assuming the WACC approved for water tariff determination remains the same, we shall see Wessex revenue and earnings base doubling up by 2030.

The fact that analysts in Singapore are generally upbeat on Keppel and Sembcorb earnings for next few years, and investors ascribe a PER of 10x to 12x to them, speaks loud on PowerSeraya's earnings for next 2-3 years.

It is only that local analysts who are not familiar with the Singapore electricity market tends to give ultra conservative projections that PowerSeraya earnings will be halved in 2025 from current levels.

On PowerSeraya strong earnings, the management could only give assurances for next 2 years based on the longest retails contracts they have secured. That will take us to 2025. Really beyond that nobody can give any promise on earnings, as it will depend on whether the Keppel and Sembcorb new unit can get commissioned on time and if the peak demand will continue to be as strong. You will need to talk to the industry players in Singapore to get a good sense of how it will pan out. A good guide is to get analysts reports on Sembcorb and Keppel and their earnings projection for these 2 Singapore gencos who regularly update analysts with their generation and earnings projections.

@observatory, the regulated return of 9% for telecommunication refers to the regulated return for DNB shareholders who are the 5 telcos and the government. DNB will earn a fixed regulated return on the capex it invested to roll out the 5G network.

For the 2nd 5G network, as the government already said it would offer the same wholesale access prices so it would have no impact on telcos who are using the 1st network DNB. Maxis was pushing hard for the setting up of a second 5G network as Maxis thought it could do it cheaper than DNB and hence could have lower network access fee, but the government insisted on the same wholesale prices before it approved the second network. Maxis had no choice but also to subscribe to similar level of equity stakes in DNB.

The whole idea is to provide a level playing field to all telcos in the 5G game.

Bonia Q1 FY2024 result is not too bad with core net profit close to RM9 million excluding extraordinary items. As expected, an interim dividend of 2.0 sen is declared.

The topline remains resilient while profit drops more substantially due to higher salary costs and operating expenses. With a gross profit margin of close to 60% and EBITDA margin close to 25%, Bonia should be able to ride through the inflationary pressure, I believe.

Looking towards a bumpy final dividend come June 2024

@xiaochen, thanks for the news link.

Indeed data centre park needs lot of water supply apart from consuming lots of power. The state assemblyman said the anticipated water supply to the Kulai data centre park will increase by 160% by 2028 when the 2nd phase of data centre completes.

This implies the second phase data centre has a capacity of 1.6 x 72MW (1st phase) = 115MW. Hopefully YTLP will confirm this soon.

@KingKKK, I asked the same question earlier but after further thoughts, it seems like the better time for a listing of Wessex Waters should be after 2025 when its RCV will expand beyond 4.0 billion pounds sterling and UK inflation to have cooled off by then. Pls see the earlier article below for more details.

https://klse.i3investor.com/web/blog/detail/dragon328/2023-08-24-story-h-241866920-YTL_YTL_Power_Electrifying_Up_to_Record_Profits

During the upcoming AGM, pls remember to vote for the proposed company share buyback. As YTLP bosses always think that the current share price of YTLP is grossly undervalued, they will buy back shares aggressively at current low prices then distribute them as share dividends later. Company share buyback of 10% then subsequently cancelled out at treasury or distributed as share dividends will reduce outstanding share base by 10% and increase earnings per share by 10%. Good for all!

This counter will definitely reach RM4.00, just a matter of time. I would always advocate for long term investment holds, and you will always win.

I am not suggesting for anyone to enter into short term trades or chase high now, as I am not sure how long this round of consolidation will last. We should not under-estimate the amount of short term selling pressure.

I can see now that smart money is collecting tickets at RM2.35 while short term traders and short term funds take profit

If we look at other stocks under Utility sector:

Petronas Gas Q4 net profit RM477m, Maybank projects full FY2023 NPAT at RM1.8b, market cap at RM34b, PER at 18.9x

Gas Malaysia Q3 NPAT at RM86m, Maybank projects full FY2023 NPAT at RM384m, current market cap at RM4.0bn, PER is 10.4x

MFCB Q2 at RM88m, Maybank projects full FY2023 NPAT at RM386m, market cap at RM3.5b, PER at 9.1x.

The lowest valuation of peers is at 9.1x PER, average at over 20x.

YTLP should be valued at RM3.82 if based on 9.1x PER, and valued at RM8.40 if based on 20x PER.

Another possible reason for some of these local research houses to give a low target price for YTLP is that their investment bank arm may have managed some funds for EPF and sold off half of EPF's holdings on YTL Power. They cannot simply now value YTLP at a target price substantially higher than the price at which they sold EPF holdings on YTLP.