YTL Power's AI compute could lift FY26 earnings by 4pct
KUALA LUMPUR: YTL Power International Bhd's artificial intelligence (AI) compute initiative is on track for a launch in the third quarter of 2025 (3Q25).
Maybank Investment Bank Bhd (Maybank IB) expects this to drive a potential net profit increase of around four per cent in financial year 2026 (FY26) and six per cent in FY27.
The firm continues to view YTL Power's risk-reward profile positively, especially given its undemanding valuations.
This optimism is supported by the anticipated confirmation of Wessex's medium-term recovery as well as encouraging progress in its data centre and AI compute business.
Maybank IB maintained a 'Buy' rating on YTL Power with an unchanged target price of RM4.20. Based on news reports, it said the group's AI compute business is on track to go live in 3Q25.
"While substantially more capital expenditure intensive on a per megawatt (MW) basis, the gestation period is likely minimal, unlike data centre colocation, because graphic processing units, which are the biggest cost item, are typically only procured after securing off-takers.
"Thus, upon commissioning, AI compute is likely to be immediately earnings accretive to YTL Power, in our view," it added.
Assuming a 20MW deployment as planned, Maybank IB said YTL Power could incur about RM2.1 billion in capital expenditure, which could, in turn, generate around RM130 million in profit after tax annually.
It said a 3Q25 launch for the initial 20MW would allow AI compute to contribute at least three quarters to YTL Power's FY26, potentially lifting its net profit forecasts by about four per cent and six per cent for FY26 and FY27, respectively.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
9 hours ago
- New Straits Times
YTL Power's AI compute could lift FY26 earnings by 4pct
KUALA LUMPUR: YTL Power International Bhd's artificial intelligence (AI) compute initiative is on track for a launch in the third quarter of 2025 (3Q25). Maybank Investment Bank Bhd (Maybank IB) expects this to drive a potential net profit increase of around four per cent in financial year 2026 (FY26) and six per cent in FY27. The firm continues to view YTL Power's risk-reward profile positively, especially given its undemanding valuations. This optimism is supported by the anticipated confirmation of Wessex's medium-term recovery as well as encouraging progress in its data centre and AI compute business. Maybank IB maintained a 'Buy' rating on YTL Power with an unchanged target price of RM4.20. Based on news reports, it said the group's AI compute business is on track to go live in 3Q25. "While substantially more capital expenditure intensive on a per megawatt (MW) basis, the gestation period is likely minimal, unlike data centre colocation, because graphic processing units, which are the biggest cost item, are typically only procured after securing off-takers. "Thus, upon commissioning, AI compute is likely to be immediately earnings accretive to YTL Power, in our view," it added. Assuming a 20MW deployment as planned, Maybank IB said YTL Power could incur about RM2.1 billion in capital expenditure, which could, in turn, generate around RM130 million in profit after tax annually. It said a 3Q25 launch for the initial 20MW would allow AI compute to contribute at least three quarters to YTL Power's FY26, potentially lifting its net profit forecasts by about four per cent and six per cent for FY26 and FY27, respectively.
The Star
3 days ago
- The Star
Bursa Malaysia ends morning session in positive territory
KUALA LUMPUR: Bursa Malaysia ended the morning trading session in positive territory, supported by continued bargain hunting in most heavyweights particularly in the utilities and consumer products and services sectors. At 12.30 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) climbed 0.41 per cent, or 6.28 points, to 1,514.25 from Wednesday's close of 1,507.97. The benchmark index opened 2.73 points higher at 1,510.70, and moved between 1,509.25 and 1,515.90 throughout the morning session. Market breadth was favourable with gainers leading decliners 490 to 311, while 425 counters were unchanged, 1,130 untraded, and 20 suspended. Turnover stood at 1.42 billion units valued at RM1.02 billion. Maybank Investment Bank (Maybank IB) in a note said the construction sector is expected to remain in focus as it continues its current uptrend. Similarly, the real estate investment trust (REIT) sector remains resilient despite some profit-taking observed yesterday. "Technically, we expect the benchmark index to range between 1,495 and 1,515 points today, with support levels remaining at 1,500 and 1,440,' said the investment bank. Among the heavyweights, YTL Corporation perked up 13 sen to RM2.01, YTL Power International increased 21 sen to RM3.50, Petronas Chemicals garnered 11 sen to RM3.35, MR DIY rose 5.0 sen to RM1.60, and Sime Darby increased 3.0 sen to RM1.73. Among the most active stocks, ACE Market debutant Signature Alliance Group surged 8.0 sen to 70 sen, NexG eased half-a-sen to 37.5 sen, MYEG put on 2.0 sen to 92 sen, Tanco was 1.0 sen better at 99.5 sen, and Gamuda added 4.0 sen to RM4.70. On the index board, the FBM Emas Index climbed 52.10 points to 11,335.17, the FBMT 100 Index garnered 50.57 points to 11,103.52, and the FBM ACE Index increased 1.76 points to 4,481.41. The FBM Emas Shariah Index surged 75.35 points to 11,317.01 and the FBM 70 Index advanced jumped 91.89 points to 16,260.88. Sector-wise, the Financial Services Index fell 70.90 points to 17,689.95, the Industrial Products and Services Index was up 1.29 points to 151.39, the Plantation Index gained 18.00 points to 7,221.67, and the Energy Index shed 0.57 of-a-point to 701.89. - Bernama
The Star
4 days ago
- The Star
De-dollarisation unlikely in near term
PETALING JAYA: The US dollar's weakening since early January and the rise of emerging market currencies, including the ringgit, is not a sign of drastic de-dollarisation and is possibly temporary in nature. While economists do see a long-term structural shift away from the greenback such as in international reserves and trade, many believe the current dollar weakness is of US President Donald Trump administration's own making. Interestingly, Trump favours a weak dollar as he attempts to bring back manufacturing into the world's biggest economy. Economist Geoffrey Williams told StarBiz the volatility in the greenback is driven by 'short-term issues' related to the tariffs and the general stance of US economic policy. 'This is normal during periods of policy uncertainty. The dollar weakness will continue until the tariff issues are settled, then there will be a turnaround. This may happen as early as July when the 90-day pause period ends or earlier as tariff deals are announced.' Williams, however, acknowledged there is a long-term shift in the use of the dollar, with the greenback's use in international reserves falling from above 70% 25 years ago to less than 60% now. 'This is likely to continue, but it is not necessarily due to the current short-term issues,' he said. The US dollar has been on a downtrend this year, with the Dollar Index falling by 8.6% year-to-date to below the 100-point mark. Any value below 100 is considered a territory of weakness for the US dollar. As at press time yesterday, the Dollar Index was around 99.2. Meanwhile, the ringgit has appreciated by 4.9% year-to-date to RM4.24 per US dollar. Maybank Investment Bank Research (Maybank IB) expects the ringgit, along with major regional currencies like the Singapore dollar, rupiah and baht to further strengthen this year, as global investors spread their holdings more widely after years of heavy US positioning. 'However, while this may occur, we are not convinced yet that there is sufficient evidence to show a real structural shift out of the US dollar into the region,' it said in a note. According to Maybank IB's forecast, the ringgit is ripe to test RM4.10 by the fourth quarter of this year. The research house said Trump's capricious nature may continue to inject volatility in the markets. However, unlike past episodes of risk aversion, the US dollar was punished most discernibly as part of the 'Sell America' narrative. 'We found signs of US dollar risk premium rising in recent price action by looking at a GARCH model of the Dollar Index volatility and the rise may not be completely done as we are still off historic highs. We suggest to continue selling the US dollar on rallies if the United States continues to push its agenda of tariffs,' it said. Beyond tariffs, Socio-Economic Research Centre (SERC) executive director Lee Heng Guie believes the United States' unsustainable debt and budget deficit are also weighing on the dollar. Additionally, foreign investors have rebalanced their portfolios as they reduced exposure to the US dollar-denominated assets and switched to other currencies. 'It is reckoned that the US dollar has not enjoyed the same hegemony of its 1990s heydays. De-dollarisation and a long-term trend towards diversification of currencies in global financial transactions and trade is a growing trend in the face of shifting global power dynamics. 'Prospects for the US dollar may not be as bright as they once were, as some diversification from the greenback is underway as the world's economic centre of gravity is indeed shifting eastward towards China, India and other emerging markets,' said Lee. Meanwhile, Williams pointed out that investors were moving into other currencies including major liquid currencies like the euro, pound and yen. 'The move to use national currencies in bilateral trade is also increasing as is the use of cryptocurrency investments and all of this is market driven which is likely to continue,' he said. Despite the shift away from the US dollar, it is noteworthy that it has retained its position as a leading reserve currency. In 2024, the US dollar's share of global reserves stood at 57.8%, although this was a reduction from a peak of 71% in 2000 and 62.3% in 2010. SERC's Lee said since end-2020, central banks' reserve diversification has not been towards the euro, pound sterling and the Japanese yen, but towards non-traditional reserve currencies such as the Chinese yuan and other small, open and better managed currencies including the Australian dollar. The euro's share of global reserves was reduced from a peak of 25.8% in 2010 to 19.8% in 2024, while that of the yen's share also fell from 6% in 2020 to 5.8% in 2024. Based on available data, the yuan's share of global reserves, which was 1.23% in 2017, has increased over the years to remain constant at 2.3% in 2020 to 2024. In terms of cross-border transactions, the US dollar is also the most used currency in the world. Based on the data from the international payment messaging system SWIFT, the US dollar had a share of 60.1% as of December 2024, followed by the euro (12.8%). The yuan's share was 2.8%. Maybank IB also highlighted that the share of US dollar transactions on SWIFT had actually increased in recent months up to April 2025. 'This does suggest that the dollar's dominance is hard to challenge in the near term,' stated the research house. Regardless, Lee foresees the trend of the dollar weakness to continue on persistent worries about the tariff policy uncertainty and the US growth prospects. The more discerning concerns are the impact of Trump's proposed 'One Big Beautiful Bill Act' raising the US debt and deficit by trillions of dollars. Additionally, the Federal Reserve interest rate cuts to combat cyclical weakness could hurt the dollar further. With a weak dollar in place, it would mean a period of strength for the ringgit. Lee said that a strong ringgit is good for businesses importing intermediate and capital goods, while it could dampen the export-oriented industries' competitiveness, in particular to the US market. 'A favourable exchange rate is not the only factor influencing a company's price competitiveness. Non-price factors such as enhanced quality or better labelling of exported products as well as product differentiation and value-addition are also important to sustain real price competitiveness.' Williams, on the other hand, said the weak dollar will impact Malaysian exporters through continued volatility, which affects pricing into export markets. 'This is normal but the real issue for exporters is the outcome of the tariff negotiations. 'If this goes well, it will be better for exporters, but they may still face the 10% baseline tariffs and will have to change business models due to that,' he said.
