MBSB is keeping its Buy call on YTL Power, with a revised sum-of-the-parts target price of RM5.63, supported by a faster-than-expected increase in demand for its colocation data centre services and plans to scale capacity up to 1,000MW.
“We remain positive on the group’s push into the data centre space, which is emerging as a key growth driver going forward,” said MBSB.
The company is accelerating development of its Green Data Centre Park in Kulai, with plans to double capacity from the initial 500MW to 1,000MW.
To date, 300MW has already been secured, and management is targeting an annual expansion of around 200MW.
At this pace, the full 1,000MW capacity could be reached within three years, underpinned by strong demand as US developers grapple with power supply limitations and delays in data centre rollouts.
Management guided that they are able to construct 100MW every 15 months.
The fuel cost risk at Power Seraya in Singapore will largely be neutral moving forward as future gas procurements are effectively centralised via GasCo, a state-owned entity to centralise procurement and supply of gas to the power sector.
This means gas will be supplied to all generation companies at the same price, reducing upside from cheaper procurement but also reducing downside from gas shortage.
YTL Power will still be able to benefit from gas contracts signed earlier at lower prices.
Meanwhile, Power Seraya also had its lease extended for 30 years, at a cost of SGD220 mil, securing long-term land access in a market where new power plant sites are scarce.
The mushrooming of data centres globally has led towards a shortage of gas turbines as developers are increasingly being pushed towards on-site generation and due to higher demand for electrification. Prices are also soaring by about 50% to 100%.
In Malaysia, YTL Power is among the few developers that have managed to secure turbines, having three in hand that were procured last year.
“We believe this may give them the competitive advantage for NEWGEN26, which is the new gas-fired generation capacity for the year 2029 to 2031 that was announced by the Energy Commission (ST) last month,” said MBSB. —Apr 3, 2026
Main image: YTL Power
