@William Wang, thanks for the inputs. Ya we are looking at easily 30% to 50% energy loss in extracting hydrogen out of water in electrolyzers, in compression, in storage and transportation. If the green hydrogen is produced with solar energy, then the cost of producing green hydrogen may be 50% higher than the levelised cost of solar energy, i,e. up to 150% x RM0.22/kWh = RM0.33/kWh.

When LNG becomes higher than US$9.62/mmbtu, then the cost of generation using green hydrogen may become cheaper than burning LNG in Singapore. That's what everybody in Singapore energy sector including EMA is looking at for next few years.

You guys should read Hong Leong research report on IOIPG if you want to know more on its potential earnings explosion in next 2-3 years.

Net profit is projected to exceed RM1.0 billion by FY2026.

@cktay, yes when the green hydrogen production technology matures in the next 10 years or so, the cost of producing green hydrogen will be lower than LNG, and PowerSeraya will be able to reap the tremendous benefits of the cost advantage.

Just for simulation, if cost of green hydrogen becomes 10% cheaper than LNG in Singapore, then PowerSeraya's new 600MW hydrogen-ready CCGT will be able to generate additional profits of SGD37 million a year.

@Raymond, what you said about solar power up there is right to some extent. Solar power generation is intermittent and in Malaysia solar panels generate electricity for about 4 hours a day, so it cannot replace gas or coal-fired power plants entirely, unless you have massive battery or other forms of energy storage.

But if you calculate the levelised cost of generation, solar power has become much cheaper than gas or even coal-fired power at current prices. Based on LSS4 bid results, the winning bids show that solar projects can provide decent returns at just RM0.22/kWh.

In comparison, at current crude oil prices of about USD80/bbl and current LNG prices, an efficient F-class CCGT has a generation cost of US$9.82/mmbtu /1.05506 GJ/mmbtu x 3600/50% GJ/GWh = USc 6.7/kWh or RM0.317/kWh.

CCGT generating cost was almost double last year when LNG spot prices went up to as high as US$18.30/mmbtu.

LSS4 bids were based on solar panel prices of around US$700/kWp then, now solar panel prices have dropped by almost 80% to US$120-150/kWp. So the levelised cost of generation for solar power will drop from RM0.22/kWh to below RM0.20/kWh.

As for rooftop solar panel installation, it has been selling like hot cakes among industrial factories and commercial buildings like shopping malls, as the payback period is as short as just 3 years, with the green tax allowance. For residential houses, the payback is about 6-7 years without the green tax allowance. I know this well as I was selling solar power solutions to industrial factories before. And the quota allocated by the government every year was snapped up within months by factories that consume a lot of electricity.

@Raymond, YTL Power has got sufficient land at Kulai to install solar power to power up the 500MW data centre it is building. For the first phase of 48MW with SEA Ltd., YTL Power is getting power supply from Tenaga as it does not make sense to install solar power just for 48MW. When the next data centre is ready, YTL Power shall install sufficient solar power for all the data centres.

Then YTL Power will be able to save a lot of electricity costs as the mean generating costs of solar power are in the range of 22 sen/kWh to 27 sen/kWh, while Tenaga is supplying electricity to all data centre operators at 59 sen/kWh.

It is now an opportune time for YTL Power to install solar power as solar penal prices have dropped by almost 80% since last year.

Some funds bought over 4.5 million shares of YTL Power at RM5.00 and above today, but retailers sold it down to 4.95 in the last hour or two. What a pity!

The data centre game is real as can be seen from so many news flows recently on big tech companies pouring in billions into Johor/Singapore on new AI data centres to be built over next 4 years.

YTL Power has all it takes to be a big player (up to 500MW) in the data centre business in the next 2-3 years. If all 500MW of data centres are taken up in next few years, potential earnings from data centre segment will be larger than earnings contribution from power generation and water segments.

The smile on our face will get even broader once we see explosive earnings from Mcement and YTL in following quarters

https://klse.i3investor.com/web/blog/detail/rhbinvest/2024-05-08-story-h-181895661-Trading_Stocks_IOI_Properties_Group

IOIPG's strong fundamentals and explosive earnings growth from Singapore and hotel division will definitely push its share price to a breakup above RM2.36 very soon.

@RJ87, correct, KSL is the property company that made the most profit in 2023 with net profit of RM416 million, followed by SimeProp RM408 million and SP Setia RM298 million.

But KSL market cap is only a fraction of the other property companies like Mah Sing and SP Setia.

Google will be another potential customer for YTL Power's AI data centre park in Kulai.

In fact, all the big clouds such as Microsoft, Google, Meta and AWS are potential customers who could contract for YTL Power to build new AI data centres for them to operate for their AI cloud computing business.

This is good news, AWS planned investment of US$9 billion in AI data centres and infrastructure in Singapore region will add more AI jobs to the already competitive landscape in Johor-Singapore.

As Singapore has a limit of 50MW for new data centre builds per year, the headline figure of US$9 billion implies an investment of US$2.25 billion a year for max 50MW of AI data centre, which is deemed very expensive.

It costs about half the figure, or about US$1.2 billion only, to build a similar 50MW AI data centre in Johor.

I am sure when AWS team carries out due diligence, they will realise how much they could save by having YTL Power to build the AI data centres for them at the Kulai park which has a fibre connection to Singapore to reduce latency to minimum.

The proposed 13% hike in salary for civil servants will likely benefit KSL a lot as the company targets to sell a lot of affordable housing to this group of buyers

Good move of PBA today.

Looks like insiders are buying ahead of quarterly result announcement end of this month.

CLSA latest target price for YTL Power was raised to RM5.10 from RM4.65 on 17th April 2024

To add to my note above, Ambank analyst assumes half of CoreWeave's leasing rate of USD4.25/GPU/hour for H100 chips, i.e. just USD2.13/GPU/hour in calculating the potential earnings of AI data centres to YTL Power. The analyst notes that the actual leasing rate of YTL Power could be higher than CoreWeave's as YTLP is offering Nvidia Blackwell B200 GPUs which are almost 25x faster than H100 chips.

Had he used the same rate as CoreWeave, the potential net profit contribution from the 100MW AI data centre to YTL Power could be as high as RM1.67 billion a year!

Thanks Goldberg for the update from Ambank research.

Ambank analyst projects for a net profit contribution of RM835 million a year to YTL Power from 100MW of AI data centre from FY2026 onwards. That's more or less in line with CLSA projections and my own estimates.

Maybank research latest report shows that foreign funds bought in a total of RM118 million worth of YTL Power shares in April 2024 alone and bought in a total of RM66 million worth of YTL shares.

Looks like this trend is continuing in early May 2024.

@Raymond, I think Nomura analysts use a flat FX of RM3.50 to SGD1.00 throughout the period. It is hard to predict how the exchange rate will be in the future, as we can see most economists have got it wrong in the past 1-2 years, they had predicted for ringgit to appreciate against the USD but it weakened further. Now they forecase ringgit to strengthen to USD4.50 in next few months, but I think they will likely be wrong again, as recent data suggests that US Fed is going to hold rates higher for longer. Consensus now forecast first rate cut in September and only 1 cut in 2024, as opposed to projections for 1st cut in June and total 3 cuts in 2024 just one month ago. Things can change fast. Nobody can get it right, so I am comfortable with Nomura analysts assuming a flat RM3.50 to Sing dollar throughout. Some more hawkish are predicting Sing dollars to strengthen over time to RM4.00 or beyond by 2030, who knows? Sing dollars have appreciated from RM2.00 in 2000s to now RM3.50 in just 20 years. You wouldn't want to bet against it.

Nomura analysts forecast a dip in earnings of PowerSeraya in FY2025 as they assume :

"But FY25F could see a modest decline, which we expect core earnings to decline
by 13% y-y to MYR2.57bn, as we expect Power Seraya PBT (of MYR3.17bn) to come off
from a high base (-17% y-y) as retail contracts with high tariffs starts to expire, considering
the downtrend in USEP (Average Uniform Singapore Energy Price) prices from 2022 peak
levels (see Fig. 23 ), which is a closer representation to actual electricity price reflecting
the changes in spot coal/gas prices."

I feel that Nomura's projection for FY2025 is on the conservative side, as the impact of lower USEP on PowerSeraya earnings is being exaggerated. The expiry of high margin retails contracts is true to certain extent, as retails contract is still being renewed at decent margin of over SGD80/MWh, slightly lower than SGD90-100/MWh achieved in 2023.

Furthermore, we are seeing a gradual rise in USEP from early March 2024 due to stronger electricity demands and heat waves. I foresee higher retails margin and higher USEP in coming months as demand continues to rise due to heat wave, new data centres and EV charging as no generation capacity will come in before 2026.

In Nomura's target price of RM5.70 and earnings projections for PowerSeraya, they have not taken into account of and given any value to the following assets yet:

1) PowerSeraya's 600MW hydrogen-ready CCGT to be commissioned by 2nd 2027
2) digital bank JV
3) 500MW solar farm in Kulai
4) potential RE export to Singapore
5) stakes in Ranhill
6) KL WTE plant
7) UK Brabazon property project

And I feel it has grossly under-estimated the potential earnings contribution from AI data centres to YTL Power, with total PBT of only RM558 million by FY2028 with total data centre capacity of 347MW built. It has assumed an EBITDA margin of just 20% for the first phase data centre with SEA Ltd, gradually rising to 45% by 2028 as more AI data centres start to contribute. Based on my own estimation, the EBITDA margin for AI data centres of YTL Power could be as high as 84%, a tag lower than CLSA's estimated 86% EBITDA margin.

In the Nomura report, it gives a good projection of PowerSeraya's earnings as follow:

  FY2024     FY2025      FY2026      FY2027      FY2028
PBT      RM3825m  RM3169m       RM3600m   RM4051m   RM4521m   
NPAT  RM3175m  RM2630m      RM2988m   RM3362m   RM3752m  
NPAT   S$907m     S$751m         S$854m      S$961m   S$1,072m

It is more or less inline with my own projection, though I feel its earnings projection for FY2025 is slightly on the low side while the projected earnings for FY2026 and FY2027 are slightly on the high side.

Nomura analysts obviously have better understanding and more experience in analysing electricity generation companies operating in a merchant electricity market like Singapore, Japan, Australia or Philippines.

In the report, the Nomura analysts give an overview of the Singapore electricity market, which demonstrates their good understanding of the market. They state that about 70% of PowerSeraya earnings are locked in through retails contracts, 20% of contracts are sold via vesting contracts and the remaining 10% electricity is sold in the wholesale market. This is more or less inline with historical balance, though the earnings contribution from the wholesale market was traditionally much lower at less than 5% before 2023. Year 2023 was an exception when we saw very tight electricity supply that pushed the wholesale prices to sky high, and gencos benefitted a lot from selling more electricity into the wholesale pool market.

Nomura has initiated coverage on YTL Power with a BUY call and target price of RM5.70, based on 10% discount to its Sum-Of-Parts (SOP) valuation of RM6.30.

This is the second foreign research house that calls a Buy on YTL Power in last one month, after CLSA upgraded YTL Power on 17 April 2024.

This explains why we see a new wave of buying from foreign funds in YTL Power shares in past 2 weeks, after the big wave of foreign buying in early Jan 2024.

@pang72, I am not sure of Nvidia's big move into providing AI cloud services in direct competition with AWS and Microsoft.

Nvidia, being the dominant company in designing and producing AI chips, is natural in pushing for wider adoption of its DGX cloud platform which it claims works best with Nvidia GPUs. When adopting Nvidia DGX cloud platform, an AI developer will be bound to Nvidia GPUs at least for one or two generations of the AI chips. This will ensure Nvidia to continue dominating the AI chip supply.

I think I read somewhere Nvidia had invested in an AI data centre operator/service provider, CoreWeave in the US, in order to push CoreWeave continue using only Nvidia GPUs. Microsoft has since agreed to contract with CoreWeave in 2023 for a multi-year multi-billion AI data centre deal in the US.

I think Nvidia is doing the same in this region with YTL Power, by guaranteeing YTLP's access to Nvidia latest Blackwell B200 GPUs, so that the big clouds like Microsoft or Google will contract with YTLPower for constructing AI data centres for them. Then YTL Power can earn from providing the AI infrastructure while Nvidia can earn from supplying the GPUs and/or GDX cloud platform.

Bursa data shows that retailers sold a total of RM5.0 million worth of YTL Corp shares on 2nd May, while foreign funds bought a total of RM18 million worth of YTL shares.

I would suggest fellow retail investors here not to sell your cheap tickets away to foreign funds. There is plenty of upside to YTL share price, just hold for longer term.

CIMB research this morning raised target price for MCement to RM6.80, projecting double-digit growth in earnings over next 3 years.

The projected EBITDA for MCement will exceed RM1.0 billion a year, as what I forecast last year. We can expect higher dividends from MCement.

328 will not be the stop for YTL share price, as the various assets of the company are performing very well and earnings to grow big in next few years. One area that will contribute big to YTL is the cement business.

CIMB research this morning raised target price for MCement to RM6.80, projecting higher earnings growth for next 3 years. Projected EBITDA for FY2024 will exceed RM1.0 billion, as what I forecast last year.

@hng33, that's right. The increase in water tariffs will raise PBA's revenue by over RM100m a year, the bulk of which will flow to the bottom line.

The increased operating cashflows from the water tariff hike are to fund the capex for next few years, estimated at over RM300m for next 5 years. Hence PBA needs the additional operating cashflows of at least RM100m a year to cater for such capex and slightly increased opex.

Have faith

But RE import to Singapore is easier said than done, especially from other countries like Indonesia and Laos as they would need to pull under-sea power cables for hundreds or thousands of kilometers, and double or triple redundancy for under-sea power routes. Big costs, long time, many parties are involved, so much more complicated than extending the power intertie between Malaysia and Singapore just across the Causeway

The electricity export from Indonesia to Singapore has been talked about for years, and it is part of the 4,000MW RE import that Singapore is aiming for by 2035.

The RE import will be done in gradual manner as the importers are also big players in Singapore electricity market, i.e. Keppel, Sembcorp and PowerSeraya.

I am confident that the Singapore electricity market will be able to adsorb such orderly RE import as the electricity demand growth is strong enough, and as more old generating plants are retired from 2026 onwards.

Mr. OTB, big data and AI are the big trend going forward for next few years in the tech world. Big clouds are spending big on AI infrastructure, eg. Microsoft plans to spend US$50 billion on AI infrastructure and data centres in 2024, AWS spent about US$47b a year on average in 2019-2023 on AI, Google spent US$12 billion on AI in Q1 2024 alone and Meta has raised its capex range by 12% to almost US$40 billion on AI in 2024.

Nvidia CEO Jensen Huang recently said at the GTC24 that the potential AI market size is as large as US$250 billion a year. AMD CEO estimated in Dec 2023 that the market size for AI chips may reach US$400 billion by 2027.

Hence, we are seeing big clouds like Microsoft is investing big on AI in every major region and country to expand on its AI cloud computing business and footprints.

To expand their AI data centres in Malaysia, it is only natural for these big clouds to partner with YTL Power for the following competitive advantages:
1) YTL Power is the only company outside the US that has first hand access to Nvidia's latest Blackwell B200 GPUs
2) YTL Power already has a big piece of land in Kulai sufficient to support up to 500MW of green data centres, and the land is already developed with basic infrastructure ready for AI data centre installation

3) YTL group has the construction expertise and track records to develop data centres at competitive cost and world-beating time, eg. they built their first power plants in Malaysia in world record time, they already completed the data centre for SEA Ltd within a year and ahead of schedule

4) YTL group has the financial resources to start basic construction early and can do innovative financing to fund the capex, to offer certainty of delivery in Malaysia

5) YTL Power can build and run data centres at its Kulai site at very competitive costs, given that it has land and financial resources to put up solar power to lower the cost of electricity for powering the data centre, and it owns a strategic stake in Ranhill which will supply sufficient water to the data centre park at competitive pricing

In short, I think it is just a matter of time for the big clouds to strike a deal with YTL Power to build AI data centres for them, as it will take shorter time and lower cost to complete.

If you don't know anything about AI data centre business, please do not make any non-sensical comment here.

Microsoft plans to spend over USD50 billion on AI data centres in 2024. This is just the beginning.

Yes, Plantermen. It was a strategic move and a great bargain for YTL to buy into the large tract of land at Niseko, Japan. With the weak yen, Niseko is seeing more and more tourists from Asia.

YTL being the only large land owner at Niseko, it can control the supply of hotel rooms in Niseko. The room occupancy there must be very good at above 90% for YTL to develop a new hotel almost every year or two.

Once a hotel there reaches maturity and steady income, it can be injected into YTL REIT and bring back real cash to YTL Corp for its investment in Niseko.

Happy to see YTL to continue the development at Niseko Village by launching the latest hotel collection, Moxy Niseko, a 310-room 5-star hotel.

This is after the opening of Mandala Club Niseko in mid 2023.

I expect such development in Niseko to sustain forward with the opening of one new hotel every year or two, then in 10-12 years YTL will have a total collection of 10-15 hotels at Niseko which will provide steady income of RM1.5-1.7 billion a year to YTL.

Hong Leong research data shows that foreign funds bought a total of RM59m worth of YTL shares and RM56m worth of YTL Power shares last Friday.

Local institutions sold a total worth of RM12m worth of YTL Power shares, and retail investors sold RM35m worth of YTL and YTL Power shares.

Again retailers sold their cheap tickets to foreign funds.

Hong Leong research data shows that foreign funds bought a total of RM59m worth of YTL shares and RM56m worth of YTL Power shares last Friday.

Local institutions sold a total worth of RM12m worth of YTL Power shares, and retail investors sold RM35m worth of YTL and YTL Power shares.

Again retailers sold their cheap tickets to foreign funds.

@Agjl, SWS calculation and fair value are done by AI using data submitted by analysts.

The fair value of RM20.58 given by SWS is based on the following stream of projected free cashflows:

FY2024 - RM2.88 bn
FY2025 - RM2.05 bn
FY2026 - RM4.71 bn
FY2027 - RM6.57 bn
FY2028 - RM8.03 bn
FY2029 - RM9.36 bn
FY2030 - RM10.55 bn
FY2031 - RM11.60 bn

I would say the projected FCF figures for FY2024 and FY2025 are way below the most conservative projection, the FCF figures should be above RM3.5-4.0 billion each year

The figure of RM4.71bn for FY2026 looks reasonable and should be achievable.

The figure of RM6.57 bn for FY2027 is also within reach given the development in YTLP's AI data centre business.

For the FCF figures of RM8.0 to 10.5 bn in FY2028-2030, YTL Power may achieve these if it can secure customers to take up all the 500MW data centre capacity at Kulai.

Before that, I would take the latest submitted FCF figure of RM6.57bn for FY2027 as the firm data, hence the fair value would be about half at RM10.00.

@Agjl, you may just google SimplyWllllStreet and search for YTL Power in stock list

Thanks Agjl for the update.

The fair value is close to what we already argue for.

It is calculated based on decent projection of free cashflows submitted by analysts.

I see the free cashflows figures of RM5.0-6.0 billion a year for FY2025-2026 as achievable.

https://www.ft.com/content/f01c6852-8aa6-4cc0-991d-38f15077ba92

Both Microsoft and Alphabet are spending big on AI data centre this year and in 2025.

https://www.ft.com/content/f01c6852-8aa6-4cc0-991d-38f15077ba92

Both Microsoft and Alphabet are spending big on AI data centre this year and in 2025.

The big jump in fair value there is due to an updated free cashflow figure (~RM6.0 billion) for FY2027 submitted by one analyst, then AI simply uses it to project further growth forward to over RM10 billion after 2030. So the terminal value becomes very high and hence fair value also jump up high.

But I see the free cashflow figure submitted by the analyst as credible, as I myself is projecting for a net profit of over RM5.0 billion and free cashflows over RM6.0 billion for FY2027 for YTL Power.

Guess what the latest valuation of YTL Power given by SimplyWlllStreet?

Fair value for YTL Power is RM20.58 !!!

we should thank Mr. OTB for his relentless promotion and strong believe, plus his accurate technical reading of the chart for the breakup

After a long consolidation of almost 3 months, the break-up is always fast and furious.

It is not my money that you earn, it is your firm believe and own decision that makes you big money. Just pick the right stock and hold it

Happy for everyone here to make money.

At least Hong Leong research is more responsible, calling a SELL on Vitrox, advising retail investors to get out of Vitrox which is trading at 100x PER

See what Maybank research is recommending now - Vitrox

Vitrox announced Q1 24 earnings drop of 50% from last year to only RM17m, yet Maybank is still trying to defend its lofty valuation by projecting for a net profit of RM200m in 2024, I doubt its net profit can even achieve RM100m this year.

At current earnings, Vitrox is trading at forward PER of 100x, yet Maybank maintains a target price of RM7.90 which will be at PER of 105x of annualised earnings in 2024.

Now you can see how cunning some of these local analysts are, making recommendation for own good, bringing retail investors to Holland

YTL Corp is carrying out the construction work for all the data centre jobs at YTLP's Kulai data centre park. That alone will contribute billions of construction order book to YTL.

YTL will be doing the construction for the RM4.5 billion KL WTE plant, which will add another RM2-3 billion worth of construction orders to YTL.