AmInvestment Bank ascribes RM12 bln valuation to YTLP’s Johor data centre

KUCHING: Analysts at AmInvestment Bank Bhd (AmInvestment Bank) have ascribed a RM11.9 billion valuation to YTL Power International Bhd’s (YTLP) Green Data Centre project located in the Iskandar region of Johor.

In a company report, the research house believed there are two parts to YTLP’s ambitious data centre (DC) project, an artificial intelligence (AI) section which would house the computing processing infrastructure powered by Nvidia H100 Tensor Core graphic processing units (GPUs) and a non-AI section which would cater to other customers.

For the AI data centre, AmInvestment Bank estimated its valuation to sit around RM9.4 billion. It came to this conclusion by averaging out the estimations it obtained through two valuation methods.

The first valuation method estimates a RM10.6 billion valuation for the AI DC based on the US$45,000 per chip price for 50,000 Nvidia H100 chips, while the second valuation method values the AI DC at RM8.2 billion and is based on a price assumption of RM235 million per megawatt (MW) on a capacity of 35MW as a H100 chip uses 700W of power.

According to the research house, the RM235 million per MW is based on a 50 per cent discount to US DC operator CoreWeave’s own valuation of US$7 billion for its 70MW data centres in North America.

AmInvestment Bank believed that CoreWeave is a comparable standard for YTLP as they specialise in cloud hosting and utilises various Nvidia GPUs such as the H100s, A100s and A40s.

Meanwhile for the non-AI DC segment, the analyst attaches a value of RM2.5 billion based on a price of RM25 million per MW on 100MW.

“This is based on the net asset value of RM322.7mil for YTLP’s 12.5MW data centre in Singapore.”

With a robust valuation, most industry analysts have been extremely positive on the YTLP’s foray into the DC segment as they expect the segment to become a major contributor to the group’s earnings in the long-term.

However for the near to medium-term, AmInvestment Bank reckoned that the group’s DC contributions will only turn meaningful by FY26.

Currently, the group’s first phase of its non-AI DC is expected to come on-stream in the first quarter of 2024 (1Q24) but the expected rental income from this is expected to be insignificant due to its small size.

Meanwhile, part of the AI DC is expected to only be completed by the end of 2024 and while YTLP’s DC is expected to have a capacity of 500MW in total, it believed that progression will likely come in multiple stages as there is current a shortage of Nvidia H100 chips currently.

In the near-term, YTL’s Singaporean Power Seraya asset is expected to support healthy earnings growth as AmInvestment Bank have raised YTLP’s FY24 net profit by 11 per cent to RM2.619 billion to account for stronger Singaporean power retail margins.