Dragon Leong blog
YTL Power - A Big Surprise Q4 FY2024
Q4 FY2024 Quarterly Result
YTL Power announced the Q4 FY2024 quarterly result on Wednesday 21st August, one day earlier than the usual Thursday evening. Net profit came in at RM1.1 billion, way above market expectations. A breakdown of the segmental pretax profits is tabulated below:
PowerSeraya earnings is down y-on-y as expected as the last year corresponding period saw very high pool prices that gave rise to extraordinary long generation profits to PowerSeraya. Another positive surprise is the turnaround of Yes 5G segment which was boosted by some project revenue in Q4. Investment holding activities PBT includes some fair value gain from the acquisition of Ranhill, which I missed out in my earlier projection.
PowerSeraya
Back calculations show that PowerSeraya achieved net profit of SGD189 million in Q4 FY2024, which is within my expected range of SGD180-200 million per quarter. This has also come down compared to last year Q4 even after I strip out the estimated SGD30m of long generation profit. The lower core net profit in Q4 FY2024 is due to low pool prices in Q4 FY2024 (April-June 2024) and lack of spikes in pool prices after Temporary Price Cap (TPC) measure was implemented from July 2023.
The prevailing low pool prices have somewhat affected retails contract margin as some of the retails contracts are linked to the pool prices. Hence I lower my earnings projection for PowerSeraya earnings by 10% from the Q4 FY2024 level to SGD170 million net profit per quarter in FY2025 and further down to SGD150 million per quarter in FY2026-FY2029 as the new CCGT units from Keppel and Sembcorp progressively come onstream in 2026.
From 2030 when RE import starts to come into Singapore, I expect PowerSeraya earnings to further come down to SGD500 million level a year, which is based on existing 2,000MW of existing CCGT capacity at 69% capacity factor and average SGD60/MWh of blended margin (retails + vesting).
Wessex Waters
Wessex turned around in Q4 FY2024 as expected after water tariff hike from 1st April 2024. It registered a pretax profit of RM69 million or GBP12 million in Q4 FY2024. The turnaround was made possible due to much lower provisions for index-linked bonds in Q4 (Apr-Jun 2024) when inflation in the UK already dropped to near 2.0% level. The CPI increased slightly to 2.3% in July 2024.
For FY2025, I am forecasting similar level of profit from Wessex as in this Q4 FY24 until March 2025. From 1st April 2025, Wessex will enter the next 5-year regulatory period.
Ofwat issued the second draft determination on the water tariffs for the next 5-year regulatory period for the water companies in the UK in the mid July 2024 with the final determination in December 2024. The second draft determination set the WACC for return on capital at 3.664% real which is significantly lower than the real WACC of 4.382% requested by the company, but is higher than the 2.92% approved for the current regulatory period of 2020-2025.
With the non-favourable draft determination of Ofwat, my earlier earnings projection for Wessex is seen to be too optimistic. Hence to be on the conservative side, I lower my earnings projection for Wessex to be based on the WACC set in the second draft determination, though the company is optimistic that the return on capital WACC shall improve in the final determination.
In short, I project Wessex net profit to be around GBP40 million in FY2025, rising to GBP49 million in FY2026 when the full effect of the new tariff determination will be reflected. Net profit of Wessex will rise progressively to GBP60 million by 2030 as the regulatory capital value (RCV) increases from GBP4.5 billion in FY2025 to GBP6.5 billion in FY2030.
Jordan & Jawa Power
Jordan & Jawa Power earnings are parked under Investment Holding activities. This segment registered steady PBT of around RM200 million in Q4 FY2024, after I strip out RM147 million from total Investment Holding PBT for fair value gain from the acquisition of Ranhill. The PBT of RM200 million for Jordan & Jawa Power corresponds to my earlier estimate of RM120-150 million of net profit contribution every quarter.
Going forward, the earnings contribution from Jordan Power will rise gradually as project loans are getting repaid, hence lower interest expenses. There is also some inflation adjustment on Jordan Power earnings especially in the components of O&M costs recovery and mining cost recovery.
Ranhill Utilities
The take over offer at RM0.995 from YTL Power to acquire Ranhill shares closed on 25th July 2024 with minimal acceptance from the public. Yet YTL Power ended up with a majority stake of 53.194% in Ranhill. As the share price of Ranhill closed on 30th June 2024 at a much higher price than the average cost of acquisition, YTL Power recognized a one-off fair value gain from the Ranhill acquisition, estimated to be RM147 million.
Going forward, I expect Ranhill net profit to substantially improve after the take-over by YTL Power due to synergies and cost savings, also due to the explosive new water demands arising from the booming data centre developments in Johor. I expect Ranhill to achieve net profit of RM50 million in FY2025 rising to RM100 million in FY2026-2027.
Water companies in Peninsular Malaysia are allowed to adjust water tariffs every 3 years after April 2024. Hence I expect Ranhill to do so and its net profit to increase to RM120 million in 2028 and then to RM150 million in 2031.
AI Data Centre
There has been numerous bad publicity on the AI data centre development by YTL Power in past few weeks such as many new data centres coming out in Johor which would increase competition to YTLP and delays in Nvidia Blackwell GPU shipment.
As far as I am concerned, I see no change to my earnings projection for the AI data centre segment of YTL Power despite all this noise.
As mentioned earlier, YTL Power has secured the first 100MW AI data centre deal with Nvidia which is already under construction and the first phase on track for completion in early 2025. Various reports stated that YTL Power has since secured another 80MW of AI data centre deal with a big cloud company, and LinkedIn posts by engineers suggest that this DC3 is also under construction now. So the revenue for YTLPower’s AI data centre business has been secured for at least 180MW of IT load, and any other new data centre announced to be built in Johor will not affect this revenue line.
There was some reports towards end of July 2024 saying that Nvidia Blackwell GPU production faced some delays of 1-2 months due to design issues. I see no issue from any such delay to YTL Power’s AI data centre progress as the first phase with Nvidia has always been earmarked to use Nvidia H100 GPUs, not Blackwell. Subsequent phases of the AI data centres may use Nvidia Blackwell GPUs when they are ready in 2025.
Revised Earnings Projection
There is no other revision made in the other business segments of YTL Power besides the changes highlighted above. I maintain the earnings projection for Yes 5G, UK Brabazon property, RE export to Singapore, colocation data centre, AI data centre , KL WTE project and PowerSeraya new 600MW hydrogen-ready CCGT.
I tabulated the revised net profit projection for YTL Power below:
YTL Power registered net profit of RM3.46 billion in FY2024 or EPS of 42.7 sen. Its net profit is expected to go up to RM3.75 billion or EPS of 46 sen in FY2025 arising from Wessex Waters’ turnaround, more meaningful earnings contribution from UK Brabazon property segment, maiden earnings contribution from RE export and data centres, partially offset by a lower earnings contribution from PowerSeraya.
YTL Power net profit is expected to breach the RM7.0 billion mark by FY2030 after the full earnings contribution from AI data centres and PowerSeraya new 600MW hydrogen-ready CCGT come into effect.
Valuation for YTL Power
With the latest Q4 result, YTL Power has become the cheapest utility stock in Bursa. YTL Power is trading at historical PER of just 8.8x, dropping to 8.1x in FY2025 and 6.5x in FY2026. In comparison, Tenaga is trading at 23x PER on FY2024 earnings and Petronas Gas at 20x FY2024 earnings.
To me, YTL Power should be trading at minimum PER of 10x and a fair PER of 15x, hence it should be trading at RM4.27 minimum or RM6.40 in 2024, rising to a minimum of RM4.62 to RM6.93 in 2025.
Over a longer term, I see not much challenge for YTL Power share price to test RM8.70 to RM13.00 by 2030.
The original article was first published on 21 Aug 2024 at dragonleong.substack.com
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YTL & YTL Power - The Best Performing Stocks May Again Double Up in AI Driven Rally
Created by dragon328 | May 23, 2024
Discussions
10 people like this. Showing 47 of 47 comments
Thank you dragon328. You are the reason why I invested in YTL Power...
At current closing RM 4.20 and yesterday collection at RM 3.770, now Mabel can sleep like a baby...
Thank you also to the Short Sellers for pressing the price down..
To Our Success !
Meow Meow Meow
2024-08-22 19:52
TQ for the excellent write up dragon328, just a few comments
1) Surprised to see a high reduction in powerseraya contribution, dropping 42% from 2024 to 2032. This si expected but have you also taken into account that RM may further strengthen beyond the 3.5x rate in 1H 2024? It is already at 3.35x as of Aug?
2) Hwo did you estimate barbazon? Furthermore, why do you estimate 290m profit in 2026 and growing every year to 500m in 2032? Surely once the build up is complete..... sales shd take 1-2 yrs to deplete inventories. So why the assumption of repeat sales all the way to 2032?
3) Whats the diff between colocation and AI DW? Whats the probability of hitting the forecast 1b profit in 2026?
Hope my questions will enable us to better refine the forecast for better information dissemination :-) cheers and happy hunting
2024-08-22 20:20
@Mabel, congratulations on making good profit out of the mini crisis in YTL Power. Short selling activities on YTLP have been rampant in past 2 weeks with NSP building up to over 18 million shares, and shorties sending troops to spread unfounded bad news about the company. Making things worse is the persistent foreign funds selling though this has eased starting this week.
Under such circumstances, it really takes gut and strong faith to buy into YTLP at RM3.77 almost the lowest point. You only have yourself to thank, I believe. You are cool and calm, something many admire.
2024-08-22 20:37
@raymondroy, thanks for the queries which are good for us to discuss and firm up the projections.
First on PowerSeraya earnings, it is inevitable for its generation / retails margin to gradually come off the peak in FY2024 as more new capacity comes onstream, eg. an OCGT of 200-300MW coming in 2025 then 2 units of 600MW CCGT from Keppel and Sembcorp coming in 2026. My base projection assumes that these new units will replace part of Keppel and Sembcorp's older units and electricity demand growth in Singapore is as high as what EMA projects. I may need to do some revision if actual situation turns out to be different from these base case assumptions.
As for FX, I usually do not speculate on FX movements so I just use a base rate of SGD1.00 = RM3.48 which was the average in Q4. Similarly when I first wrote on PowerSeraya 2 years ago, I think I used the prevailing FX then of 3.30. Nobody knows how the FX may move in the future, some predicts ringgit to further strengthen against USD and SGD but I tend to think that a country's currency is always tied to its economic strength in the long run, as evidenced from the decades-long appreciation of SGD against RM. Remember late last year, most people were thinking that RM would drop to RM4.00 to SGD1.00 and RM5.00 to USD1.00 but it stopped somewhere before.
2024-08-22 20:46
As for Brabazon property project, the earnings projection is based on the following assumptions and basis:
approved development plan of 6,500 new homes
and 4 million sf of commercial areas may contribute net profit of RM225 million a year
to YTL Power for next 10 years (based on assumed average selling price of GBP275k
per house, total GDV of GDV1.8 billion over 10 years, 25%-30% gross margin and
GBP50m gross profit a year at 25% tax rate), increasing over time to as high as RM600
million as the commercial areas are fully developed and leased out (assuming all 4
million sf of commercial space to be leased out at GBP25-30 psf per month to
generate gross rental income of GBP100-120m/year, deduct 25% of miscellaneous
charges and 25% tax).
The increasing earnings contribution is due to the increasing commercial space for rental income as more commercial properties are developed over the 10 year period.
2024-08-22 20:50
excellent analysis, my qs is we expect power seraya earnings to slower come down, but the question remains will the profits in other segments mainly investment holdings be able to make up for that difference? cos i dun expect wessex water and especially ytlc to make significant contributions to make up for power seraya's slow earnings deterioration.
Also many thanks on mentioning the Brabazon property project, as upong further digging only i find out that Brabazon property project is owned by ytl development which is subsidiary of YTLP, none of the sell side analyst mentioned this or take their project into account in their valuation of projection
Either way, as it stands, market values ytlp at just under 10x laggin earnings, which is ady a discount from its historical high of 12x earnings, assuming static earnings (which is highly unlikely), its trading at a big discount with all the long term catalyst incoming, risk lies in execution by management, but they have shown to have a good track record so far
2024-08-23 13:40
@eugenewong794, that is a valid concern. You can see in my earnings projection, PowerSeraya net profit contribution is expected to drop by RM700 million in FY2025. Wessex may only make up a portion of the drop. I am banking on more meaningful contribution from UK Brabazon property project in FY2025 to help beef up YTLP earnings.
But a large portion of earnings rebound will come from data centre segment. The colocation data centre segment is pretty much secured for FY2025-2027 but the potential profit margin is unknown at the moment, hence a grey area for sell side analysts to push down the earnings projection.
For AI data centre segment, YTLP is looking for offtakers to fill up some 50MW capacity, according to the analyst briefing call held on Wednesday evening. This is potentially another area which I may need to adjust down the earnings projection. CUrrently in my projection, I assume 50MW of AI data centre will be up and running from early 2025.
2024-08-23 14:19
Fair points, so areas to watch will be how much the AI data center can contribute to earnings, wessex water ofwat draft for FY25-29 and YTLC developement
For AI data center, its just a matter of waiting for more news/development ? same for wessex water ofwat draft
As for YTLC, I dun expect YTLC to make big profits but as long as breakeven is good enuf, but i think we can agree that YTLC is the hardest to project, it wud b good if they are venture into other revenue stream besides the ultra competitive low margin consumer telco business, but this is a wait and see, i'll b watching the DNB and 2nd 5g network developement closely
Lastly for the Brabazon property, AFAIK, UK property market is not very good now, based on some conversations with analyst and fund managers, but with cooling inflation in UK, there might b some good developement, might i suggest monitoring EWINT cos they also have properties in UK, if they do well, we can expect some upside from this project, but my concerns as with all property business, is how recurrent is the income from property related business cos most arent recurring unless its rental
2024-08-23 23:19
Going forward, the earnings contribution from Jordan Power will rise gradually as project loans are getting repaid, hence lower interest expenses. There is also some inflation adjustment on Jordan Power earnings especially in the components of O&M costs recovery and mining cost recovery.
One should take note that YTL has a shareholder loan of 2.5B to Jordan projects, of which include accruals of the interest. The interest is accrued to shareholder loan and not to interest income but income deffered as you can see in the annual report, then the interest is amortized accordingly. In cash flow statement, i didnt see the shareholder loan is repaid yet.
2024-08-23 23:53
@eugenewong794, yes going forward we should monitor the news flows from the AI data centre development and Ofwat final determination in Dec 24.
As for UK Brabazon property segment, the cooling inflation and lowering interest rates are good signs, and the first increase in average July home prices in London area in several years bores well for the rebounding property sector in the UK.
2024-08-25 17:32
@sii581014, the shareholders' loan from YTLP to Jordan Power project company has increased over the years of construction as the interest income was accrued and added to the shareholders' loan balance. Post commercial operations, I think the Jordan Power project company has been paying the interests to the shareholders' loan from YTLP at 15% p.a.
I am not sure when exactly the shareholders' loan will get repaid, but typically after the project loans are fully repaid in 10-15 years after commercial operations.
2024-08-25 17:36
Mr dragon328,
For water supply utilised mainly for cooling systems of Data Centres in Johor, data from Ranhill shows that it has received application for 440 million litres per day of water between 2024 and 2035 from data centres.
Of this amount, 316 million litres per day of water have been supported, while the remaining 30 million litres per day have yet to be supported by the water operator.
Based on the usage of 316 million of water per day, yearly usage is equal to 115.34 billion of water or 115.34 million m3 of water.
The yearly projected profit before tax = RM2.50 x 115.34 million = 288.35 million.
The annual PAT should be around 208 million or 52 million per quarter.
I believe your PAT of Ranhill is on the low side.
Please check and advise.
Thank you.
2024-08-25 21:58
Mr. OTB, my earnings projection for Ranhill was very rough in this article as I have not really studied the company in details.
My earnings projection of RM50m in FY2025 rising to RM100m in FY2026 was purely based on the assumption that YTLP would be able to introduce cost cutting measures and synergies into Ranhill after take-over, and nothing yet from increase in water supply for the booming data centres.
If you look into Ranhill latest June 2024 quarterly result, you see a segment called Investment Holding and Management that lost RM78.414 million in half year 1H 2024. That could be the low hanging fruits that YTLP could plug any leakage in Ranhill. I assumed YTLP to be able to cut 1/3 of such losses in FY2025 and 2/3 in FY2026.
For the increased profit in FY2028 and FY2031, I assumed that would arise after a water tariff hike every 3 years after the last one in Feb 2024.
2024-08-26 08:26
I am not sure of how much increase in water supply volume Ranhill will see from the new data centres in Johor. Just doing a rough estimate
Ranhill SAJ supplied a total of 671 million m3 of water in 2022, and Ranhill achieved revenue of RM1,173 million for the water / environment segment in FY2022. This implies an average water supply tariff of RM1,173/671 = RM1.75 per m3.
Based on your figure of 115 million m3/day of water usage increase by 2035, that would be equal to 17% increase from existing water supply volume in next 10 years, which seems reasonable to me. Ranhill SAJ should be able to meet such water demand progressively.
However, I am not sure of where you got the figure of RM2.50/m3 of pretax profit margin from.
2024-08-26 08:37
The water price for commercial operation is 3.50/m3.
The cost of water production is 1.00/m3.
Pretax profit is 2.50/m3.
Thank you.
2024-08-26 09:02
I have not put in any profit at all from the additional water supply to new data centres, so you are free to add in any extra profit Ranhill may get from such supply.
I will just remind that Ranhill will need to incur some capex to expand its water treatment capacity and expand water piping network before it can supply such a big increased water supply, so depreciation charges and interest expense will increase which will lower your additional profit projected above. Please take note. Thank you
2024-08-26 14:34
one mw of ai data centre can generate how many revenue? how to estimate revenue of a data centre? thanks
2024-08-26 17:27
in the computation of 1.8b profit annually what is the roi ? from the investment in 200mw data centre. thanks
2024-08-27 08:19
@Aero1, I suggest you go through my previous article below in which I detailed calculations on potential AI data centre earnings.
https://klse.i3investor.com/web/blog/detail/dragon328/2024-05-23-story-h-161458128-YTL_YTL_Power_The_Best_Performing_Stocks_May_Again_Double_Up_in_AI_Driv
2024-08-27 09:12
As for ROI, I calculated that for a 48MW AI data centre, the median capex was RM5.2b and net profit estimated to be RM768m a year, so ROI may be15%.
2024-08-27 09:13
many thanks dragon for sharing the link.
1. usd590 million revenue from 48mw so 1mw equivalent to usd12 million, do you think is too high?
2. ebitda 82%? equinix ebitda only 47%
i stand guided thanks
2024-08-27 12:51
Mr dragon328,
I hope you do not mind I post this article in your forum.
----------------------------
1.) Malaysian Ringgit is strengthening against other major currency especially USD is a good news to Malaysian stock market.
2.) The Malaysian export increased by 12.3% in July 2024 compared against July 2023.
3.) The GDP growth for Q2 2024 is 5.9%.
4.) The foreign funds were net buyers accounted for RM 1.693 billion from 16/8/2024 to 22/8/2024.
5.) Goldman Sachs upgrades FBMKLCI ratings. Please read the link below.
https://guangming.com.my/%E5%BB%BA%E8%AD%B0%E6%B8%9B%E6%8C%81%E6%96%B0%E5%8A%A0%E5%9D%A1%E8%82%A1%E7%A5%A8-%E9%AB%98%E7%9B%9B%E4%B8%8A%E8%AA%BF%E9%A6%AC%E8%82%A1%E8%A9%95%E7%B4%9A?
6.) The JP Morgan upgraded Malaysia equity, this upgrading will attract more foreign investments from the US.
7.) Nomura broker highlights that foreign investors should leave China stock market to invest in Malaysia and Indonesia stock markets.
https://www.businesstimes.com.sg/companies-markets/banking-finance/nomura-cuts-chinese-stocks-fund-indonesia-malaysia-switch
All these news will attract foreign investors to invest in KLSE.
These news will make our KLSE into a bull market.
However, based on TA, technology index is bearish.
If the Federal Reserve reduces interest rate in September 2024, the reduction in interest rate will benefit technology stocks.
I believe the correction in technology stock is at the tail end, just be a bit patience to wait.
Bull market will come soon.
I believe the Federal Reserve will reduce interest rate in September 2024.
Please note that I have done an analysis on KLSE performance after the Federal Reserve reduced interest rate in 2001 and 2007.
KLSE performed very well after the Federal Reserve reduced interest rate in 2001 and 2007. Hence I believe KLSE will be in a bull market after September 2024.
YTLPower is also a bit related to technology stock, hence I believe the correction is at the tail end.
Uptrend will come very soon.
Based on TA, I want to see the share price crosses above the resistant trendline, then the share price will breakout.
The breakout price is around 4.10 level.
Good luck.
Thank you.
Ooi
2024-08-27 13:40
@Aero1, the estimation on AI data centre earnings is tough as limited info is available now. I was using my best guess as to the average rental rate of GPU per hour, overhead costs, and depreciation assumptions.
As you can see from my previous article, the EBITDA will drop to low 70+% without solar power.
Also if the depreciation period assumed for the GPU chips is shortened to 3 years, the pretax profit will reduce by 30%-40% straightaway and EBITDA margin down to 40%-50%.
So it is really up to what assumptions you make in the average rental rate per GPU per hour, overhead costs and depreciation / tax assumptions.
2024-08-27 16:43
Mr. OTB, be my guest.
I do reckon that Bursa is entering a bull market now.
2024-08-27 16:43
Infrastructure and government-linked (firms).
Maybank IB also foresees enhanced domestic investments by government-linked companies and government-linked investment companies (GLCs/GLICs), with committed investments in domestic capital markets totalling RM440 billion and RM120 billion in domestic direct investments (DDI) over the next five years.
---------------------------
I believe this RM 120 billion is coming in to invest in KLSE.
Thus, FBMKLCI has already hit all time high in 2024.
I hope that once all finance stocks have moved up north, it will help other sectors to perform well in 2024.
YTLPower and YTL are component stocks of FBMKLCI index, no reason these 2 stocks cannot perform.
Need to wait for "GLC" to push up these 2 stocks who are heavy weights.
Retail investors cannot push up these 2 stocks, need local or foreign institutional funds to do this job.
Hope that we do not need to wait for too long.
Good luck.
Thank you.
2024-08-28 14:44
YTLPower and YTL are component stocks of FBMKLCI index, no reason these 2 stocks cannot perform.
Need to wait for "GLC" to push up these 2 stocks who are heavy weights.
Retail investors cannot push up these 2 stocks, need local or foreign institutional funds to do this job.
Very weak argument of this.
Not long ago during Glove Theme in 2020/2021, I think Topglove , Supermax n Harta were added into FBMKLCI Index. Their price went all the way to South and not long after all were being kicked out.
I think most local n foreign funds are oredi in YTLPower long ago and are sitting on big fat paper gains, despite a 30% drop from it's recent peak of RM5+.
Sifu, u need funds from other planets (say Mars) to push up the price to RM6+ or RM7+or whatever TP U want
2024-08-28 14:55
Mr dragon328,
I checked all the technical charts of technology stocks, it appears that some funds are selling all technology stocks aggressively.
It is not the fault of the owner of Notion, not warehouse financing or margin call.
I believe the funds are selling all technology stocks aggressively to swap to finance or bank shares.
Even strong stocks like MPI, Inari, Frontkn, Greatec, Penta, KGB, PIE and etc are not spared.
I do not know when they will stop selling.
It is very sad to note that the share prices dropped a lot in August 2024.
We cannot help until they stop selling.
I read all the charts everyday, it is my finding.
Likewise, the funds are also selling YTL and YTLPower.
Thank you.
2024-08-28 22:41
both Nasdaq and Hang Seng committing suicide due to recession fears.
2024-08-28 23:12
Mr. OTB, It is true that foreign funds have been selling YTL Power and most recently property counters, and buying lots of banking stocks.
They have sold a lot of technology stocks, I think, mainly based on over-valuation and reducing profits. Inari reported lower earnings yesterday.
As for YTL Power, I do not want to speculate too much at this moment on why there was so much selling on the stock. One of the reasons was rampant short selling activities on YTL Power days before the Q4 result announcement. Shorties were betting on a disastrous Q4 result from YTL Power but to the contrary, YTLP reported a super strong Q4. Some short positions were closed shortly after the Q4 result announcement, about 8.5 million shares last week, and again about 6.0 million shares yesterday.
Foreign funds still hold little bit of YTLP and their selling on YTLP has eased off lately. I am waiting to see when most of the shorts are closed and foreign funds holding in YTLP turns towards zero, then I can only have some clues on the reason behind the selling.
I do not think the selling has anything to do with fundamentals.
2024-08-29 00:02
I do not simply talk without facts and figures.
I have done my homework before I post anything in I3.
I believe the Federal Reserve will reduce interest rate in September 2024.
Please note that I have done an analysis on KLSE performance after the Federal Reserve reduced interest rate in 2001 and 2007.
KLSE performed very well after the Federal Reserve reduced interest rate in 2001 and 2007.
The below events will make KLSE into a bull market.
1.) Malaysian Ringgit is strengthening against other major currency especially USD is a good news to Malaysian stock market.
2.) The Malaysian export increased by 12.3% in July 2024 compared against July 2023.
3.) The GDP growth for Q2 2024 is 5.9%.
4.) The foreign funds were net buyers accounted for RM 1.693 billion from 16/8/2024 to 22/8/2024.
5.) Goldman Sachs upgrades FBMKLCI ratings. Please read the link below.
https://guangming.com.my/%E5%BB%BA%E8%AD%B0%E6%B8%9B%E6%8C%81%E6%96%B0%E5%8A%A0%E5%9D%A1%E8%82%A1%E7%A5%A8-%E9%AB%98%E7%9B%9B%E4%B8%8A%E8%AA%BF%E9%A6%AC%E8%82%A1%E8%A9%95%E7%B4%9A?
6.) The JP Morgan upgraded Malaysia equity, this upgrading will attract more foreign investments from the US.
7.) Nomura broker highlights that foreign investors should leave China stock market to invest in Malaysia and Indonesia stock markets.
https://www.businesstimes.com.sg/companies-markets/banking-finance/nomura-cuts-chinese-stocks-fund-indonesia-malaysia-switch
All these news will attract foreign investors to invest in KLSE.
These news will make our KLSE into a bull market.
Good luck.
Thank you.
2024-08-29 10:30
@Aero1, I do not study Nvidia results as I have not invested in the stock. But looking at the headline numbers, I think Nvidia has delivered a Q2 result that beat market expectations with quarterly revenue of US$30.04 billion, surpassing its US$28b estimate in May. Net income rose to $16.95 billion from $6.19b a year ago, more than double year on year.
For the Q3 ahead, Nvidia expects revenue of $32.5 billion +/-2% with gross margin of about 75%. This guidance is also more than market expectation.
However, the share price dropped some 7% after hours. It did suffer the same fate as YTL Power in some way, as YTLP also announced market-beating Q4 result but share price has since dropped back to pre-result level.
I think the Nvidia result is good but did not give any positive surprise to impress the most bullish investors who have asked for the sky.
Same thing over here for YTL Power. Though the company has achieved financial results that beat market expectation, including continued strong earnings from PowerSeraya, but the sell side analysts and short sellers always have excuses to play down the record profit in FY2024.
2024-08-29 16:06
Oracle bullish guidance up to 2029
https://www.cnbc.com/2024/09/12/oracle-shares-gain-on-higher-fiscal-2026-revenue-forecast.html?qsearchterm=oracle
@dragon, does this means data centres continue to be in high demand?
2024-09-13 13:23
@Aero1, yes I do think that the AI boom will continue for at least another 1.5-2.0 years.
Oracle is not the only one bullish on the AI prospects, some other companies and analysts had predicted that the AI market size could grow to US$200 billion by 2030. Nvidia is doing US$23 billion of revenue a quarter from its data centre business division, so I guess it will double up by 2030.
2024-09-13 14:26
hi @dragon, any call warrants expiring this month that the share price of ytl power still need to overcome?
2024-09-19 09:31
Singapore data centre firm buys land across Asia, including Malaysia, to serve AI demand
https://theedgemalaysia.com/node/727210
When is next from ytl power
2 months ago
@Aero1, there will be 2 call warrants on YTLP expiring on 30 September, both are issued by Maybank, the sell-side IB. So expect some dumping of YTLP shares by the IB in the last few days before 30 Sept 2024.
2 months ago
When the Federal Reserve reduced interest rates in 1995 and 1996, the U.S. stock market responded positively over the following 12 months and even longer.
Here's a breakdown of the key periods and stock market performance during those times:
1995 Rate Cuts:
Fed Actions: In 1995, the Federal Reserve cut interest rates twice, first in July by 0.25% and then again in December by 0.25%, in response to slowing economic growth and low inflation.
Stock Market Performance:
1995: The S&P 500 gained an impressive 34.11% over the entire year, supported by the rate cuts.
12 Months Post-July 1995: The market continued to rally, with the S&P 500 gaining around 20-30% in the following 12 months, fueled by investor confidence in the Fed’s actions.
Longer-Term (1996-1997): The bull market extended into 1996 and 1997, with the S&P 500 increasing 20.26% in 1996 and continuing strong through the tech-driven growth of the late 1990s.
1996 Rate Adjustments:
Fed Actions: After cutting rates in 1995, the Fed maintained rates in early 1996 but raised them slightly in March 1997 (0.25%) to prevent overheating of the economy.
Stock Market Performance:
1996-1997: Despite the rate hike in 1997, the stock market remained bullish. The Dow Jones Industrial Average gained nearly 26% in 1996, with strong performance continuing into 1997.
Summary of Market Trends:
Economic Environment: The rate cuts helped stabilize the economy and support growth, which led to strong stock market performance.
Investor Confidence: Lower rates and a stable macroeconomic environment encouraged increased investment, pushing stock prices higher.
Prolonged Bull Market: These rate cuts contributed to the long-lasting bull market of the 1990s, leading up to the dot-com boom.
In summary, the U.S. stock market performed very well after the Fed’s rate cuts in 1995, with the S&P 500 experiencing strong gains over the next 12 months and sustaining growth into the following years.
2 months ago
There was a mad rush of data centre developers to acquire land in Johor some 2-3 months ago, then we saw less activities since early August. I guess these data centre developers have realised the difficulties in setting up a green field data centre in Malaysia, particularly in Johor.
The investment environment has become less favourable to late comers in new data centre development in numerous areas:
1) Land is becoming scarce in Johor prime area especially in Kulai where it has high tension power cables and high speed fibre connections to Singapore. Land prices there have shot through the roof. YTL Power bought the 1700-acre plus land in Kulai at just RM6.00 psf some 2 years ago but land prices have since shot up to above RM120 psf. For a typical plot of land of say 50 acres for 20MW data centre development, the land cost has gone up from RM13 million to now over RM260 million. For a 20MW colocation data centre, such a land price is making up some RM260m/RM860m = 30% of the total investment cost, compared to just 2.2% for YTLP. So you can see how disadvantaged in costs for late comers.
2) I gather that the HV tension power lines in Kulai are close to max capacity, and Tenaga has been struggling to plant up new capacity to meet the new power demand from all these new data centres. Some of these new data centre developers may have signed some form of MOU with Tenaga for certain quantity of power supply, but it is non-binding to Tenaga or either party. The key to look out for is whether these new data centre developers can achieve financial close for their new data centre projects.
3) Water supply may be another issue to the new data centre developers in Johor or any other state in Peninsular Malaysia. Recall that most of the water companies in many states have been under investing in new water treatment plant capacities in past decade or so, hence the Non-Revenue Water (NRW) is high in many states and often residents and commercials get water rationing. Ranhill as the only water company in Johor is prepared to ramp up its water treatment capacities in order to meet the huge demand from new data centres, but a potential bottleneck could be in PAAB which is the state-owned enterprise that owns and manages the water piping network in Johor. PAAB may not have the financial capability to lay hundreds of kilometers of water piping fast enough to cater for the data centre needs.
2 months ago
mr Dragon sifu, can you talk about whether the emergence of so many new data centers will affect YTL's data center? Also, will YTL's solar power plant be used only for internal purposes, or will it also export energy to Singapore?
2 months ago
@Beta Ipoh, the emergence of many new data centre developers in Johor is a normal mad rush, just like the glove mania years ago. I recall property developer like Mah Sing went into glove making during the height of Covid, and now Mah Sing is rushing into data centre business as well. But most of these new data centre developers will face obstacles as explained in my above post. Soon they will realise that it would be much cost efficient to just lease data centre space at YTL Power's Kulai DC park than to develop own data centre.
YTL Power has got sufficient land at Kulai to develop 500MW of solar power farm. I expect that solar power to mainly power up the green data centres in Kulai. For RE export to Singapore, YTLP may need to look for other land in Johor.
2 months ago
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2024-08-22 12:55