KUALA LUMPUR: Research firms are maintaining a 'buy' recommendation on YTL Power International Bhd (YTL Power) following the company's new collaboration with Nvidia.
RHB Research holds a positive view of the collaboration as the two companies are set to work on developing an artificial intelligence (AI) project to explore new income sources, adding that the project may also boost YTL Power's data centre take-up rate in Johor.
"YTL Power's earnings growth should strengthen upon the successful delivery of the project in the long run, but investors ought to take note that additional capital expenditure (capex) requirements ahead could be rather intensive.
"We are unable to ascertain the earnings impact of this YTL Power-Nvidia deals at present, but believe that such developments can be rather capex-intensive," it said in a research note today.
For a contract tenure of more than 10 years, YTL Power's current 48 megawatt (MW) data centre (estimated capex: RM1.5 billion) is projected to generate a profit before tax of RM100 million per annum.
As such, the research house is keeping its 'buy' call on YTL Power, with a target price (TP) of RM 2.95.
Similarly, MIDF Research reaffirmed its 'buy' call on the company (TP: RM2.99).
"We continue to like YTL Power for its exposure to recovery in the Singapore electricity market and strategic expansion into data centre and renewable energy (RE).
"We also believe that YTL Power is a potential beneficiary of the strong RE growth trajectory under the National Energy Transition Roadmap, particularly for RE exports, given its presence in the Singapore power sector," it said.
Meanwhile, Kenanga Research has maintained its forecast on YTL Power as it does not expect contribution from the data centre during the forecast period, but upgraded the TP for the company's shares by nine per cent to RM3.06.
"We continue to like YTL Power for its earnings stability, backed by various regulated assets globally, robust earnings prospects of PowerSeraya, and longer-term growth potential from its data centre and digital banking ventures," it said.
At 10.31 am, YTL Power rose one sen to RM2.43 with 30.28 million shares changing hands. - Bernama
