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YTLPOWR (6742): Powering Future Growth with Data Centres and Resilient Utilities
Summary (TL;DR):
- Research Firm: HLG Investment Bank
- Subject: YTLPOWR / YTLPOWR (6742)
- Core Rating: BUY
- Target Price / Top Picks: MYR 5.02
- One-Liner: HLIB Investment Bank maintains a ‘BUY’ rating on YTLPOWR, forecasting sustained earnings driven by robust data centre expansion, improved performance from UK WessexWater, and potential new power generation opportunities.
Report at a Glance
HLG Investment Bank released its latest research report on YTLPOWR on 2025-07-09, maintaining a “BUY“ rating with a target price of MYR 5.02. The core thesis of the report is that YTLPOWR is poised for sustained growth, driven by expanding data centre contributions, improving performance from its UK WessexWater segment, and potential new power purchase agreements, all while trading at an attractive valuation compared to peers.
Investment Thesis (The Bull Case)
- Point 1: Progressive commissioning and strong demand from new data centre capacities in Malaysia, including the anticipated 20MW YES AI data centre in 1QFY26.
- Point 2: Significant recovery and improved performance from UK WessexWater, supported by approved tariff increases of 13.1%-20.8% under the new RP 2025-2030 framework.
- Point 3 / Key Beneficiaries: Potential award of new gas-fired power plant PPAs in Malaysia and the upcoming start-up of the 500MW large-scale solar (LSS) project.
Potential Risks (The Bear Case)
- Risk 1: While Singapore’s PowerSeraya contributions have softened, the report notes a more constructive outlook, mitigating this as a major risk.
- Risk 2: Exposure to imported gas and LNG prices for SG SerayaPower, though management has secured long-term fuel contracts at favorable rates.
- Risk 3: General market downturns or unforeseen regulatory changes could impact performance, though the report emphasizes insulation from typical utility risks like fuel price and forex volatility due to regulatory mechanisms.
Financial Forecast Summary
The analyst’s financial projections for the coming years are as follows:
| Fiscal Year (YE to JUN) | FY25F | FY26F | FY27F |
|---|---|---|---|
| Revenue (RM mil) | N/A | N/A | N/A |
| Net Profit (RM mil) | N/A | N/A | N/A |
| EPS (sen) | N/A | N/A | N/A |
| DPS (sen) | N/A | N/A | N/A |
| Dividend Yield (%) | 2.4 | 2.4 | N/A |
| P/E Ratio (x) | 14.7 | 12.7 | N/A |
(Source: HLG Investment Bank research report)
Valuation & Target Price
| Rating | BUY |
| Last Close Price | RM 4.16 |
| Target Price (TP) | MYR 5.02 |
| Valuation Methodology | Based on Sum-of-Parts (SOP) valuation of RM6.69 per share, applying a 15% discount to account for dilution. |
Analyst’s Conclusion
- Overall Stance: HLIB Investment Bank maintains an “OVERWEIGHT” call on the Utilities sector, with YTLPOWR as a top pick, citing attractive valuation and sustained earnings and dividend visibility.
- Key Catalyst/Strength: The primary drivers are the expanding contributions from data centre operations and the strong recovery and tariff increases for UK WessexWater.
- Major Headwind/Risk: Minimal explicit major headwinds identified, as YTLPOWR’s earnings are largely insulated from fuel price and forex volatility due to regulatory mechanisms and secured long-term contracts.
- What to Watch: Investors should monitor the progressive commissioning of new data centre capacities, the outcome of tenders for new gas-fired power plant PPAs in Malaysia, and the commencement of the 500MW large-scale solar project.
Disclaimer: This article is a summary and interpretation of a research report published by HLG Investment Bank on 2025-07-09. All information is for reference purposes only and does not constitute investment advice. Investors should conduct their own independent research and due diligence and assume all associated risks.
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