KUALA LUMPUR (Sept 5): Shares of YTL Power International Bhd (KL:YTLPOWR) extended their decline on Thursday, after the company said one of its subsidiaries has been questioned by the Malaysian anti-graft agency.

YTL Power fell for the third straight day, and was down as much as 7% or 28 sen to its six-month low of RM3.61. The stock was trading at RM3.68, still down 21 sen, giving the company a market capitalisation of RM30.41 billion. Trading volume totalled 2.83 million shares at 11.20am.

On Wednesday, YTL Power confirmed that the Malaysian Anti-Corruption Commission (MACC) “recently requested information” from its subsidiary YTL Communications Sdn Bhd in respect of the 1BestariNet project, which it undertook for the Ministry of Education in mid-2017.

“At this time, we believe YTL Communications will only assist MACC in the investigations, and has not been implied in any wrongdoing,” Macquarie said in a note to clients. “Nevertheless, we expect an initial sell-down to the headlines.”

YTL Power owns 60% in YTL Communications that runs the Yes mobile network in Malaysia. In a bear case, removing YTL Power’s artificial intelligence projects from its models would cut Macquarie’s projected earnings per share for FY2026 by 31%, and pushed the fair value to RM3.64.

For now, the house maintained YTL Power on “outperform”, with a target price of RM7.30.

YTL Power’s Thursday decline also dragged the Bursa Malaysia Utilities Index down 0.7%, while the benchmark KLCI was up 0.08%.

Shares of YTL Power are still up 45% this year following recent rally, thanks to frenzy over data centres and artificial intelligence.

When the news broke, Bernama reported that MACC’s investigation centred around alleged false details related to RM2.7 billion in payments.

1BestariNet was supposed to be a 15-year service contract to provide internet connectivity and virtual learning environment to 10,000 schools nationwide.

YTL Power said YTL Communications won the project in a tender involving 19 companies.

The company however only took on two years of the project, before it was ended in June 2019, having invested over RM4 billion.

YTL Communications later claimed that the Ministry of Education had breached its contractual obligations, after it appointed Telekom Malaysia Bhd (KL:TM), Celcom Axiata Bhd — now known as CelcomDigi Bhd (KL:CDB), and Maxis Bhd (KL:MAXIS) as providers of interim internet services for the remaining second half of 2019, when YTL Communications had offered to do so for free.