Posted by Beta Ipoh > 2024-08-22 12:55 | Report Abuse

Thank's for you. Mr dragon328. u r smart.

Posted by Mabel > 2024-08-22 19:52 | Report Abuse

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

Posted by raymondroy > 2024-08-22 20:20 | Report Abuse

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

Posted by dragon328 > 2024-08-22 20:37 | Report Abuse

@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.

Posted by dragon328 > 2024-08-22 20:46 | Report Abuse

@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.

Posted by dragon328 > 2024-08-22 20:50 | Report Abuse

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.

Posted by eugenewong794 > 2024-08-23 13:40 | Report Abuse

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

Posted by dragon328 > 2024-08-23 14:19 | Report Abuse

@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.

Posted by eugenewong794 > 2024-08-23 23:19 | Report Abuse

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

Posted by sii581014 > 2024-08-23 23:53 | Report Abuse

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.

Posted by dragon328 > 2024-08-25 17:32 | Report Abuse

@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.

Posted by dragon328 > 2024-08-25 17:36 | Report Abuse

@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.

Posted by OTB > 2024-08-25 21:58 | Report Abuse

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.

Posted by dragon328 > 2024-08-26 08:26 | Report Abuse

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.

Posted by dragon328 > 2024-08-26 08:37 | Report Abuse

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.

Posted by OTB > 2024-08-26 09:02 | Report Abuse

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.

Posted by dragon328 > 2024-08-26 14:34 | Report Abuse

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

Posted by Aero1 > 2024-08-26 17:27 | Report Abuse

one mw of ai data centre can generate how many revenue? how to estimate revenue of a data centre? thanks

Posted by Aero1 > 2024-08-27 08:19 | Report Abuse

in the computation of 1.8b profit annually what is the roi ? from the investment in 200mw data centre. thanks

Posted by dragon328 > 2024-08-27 09:12 | Report Abuse

@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

Posted by dragon328 > 2024-08-27 09:13 | Report Abuse

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%.

Posted by Aero1 > 2024-08-27 12:51 | Report Abuse

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

Posted by OTB > 2024-08-27 13:40 | Report Abuse

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

Posted by dragon328 > 2024-08-27 16:43 | Report Abuse

@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.

Posted by dragon328 > 2024-08-27 16:43 | Report Abuse

Mr. OTB, be my guest.

I do reckon that Bursa is entering a bull market now.

Posted by OTB > 2024-08-28 14:44 | Report Abuse

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.

Posted by CharlesT > 2024-08-28 14:55 | Report Abuse

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

Posted by CharlesT > 2024-08-28 14:55 | Report Abuse

Sifu, try harder

Posted by CharlesT > 2024-08-28 14:56 | Report Abuse

Find some better excuses

Posted by CharlesT > 2024-08-28 15:01 | Report Abuse

https://theedgemalaysia.com/article/glove-sector-poised-be-second-largest-klcis-weighting-inclusion-supermax

Posted by CharlesT > 2024-08-28 15:01 | Report Abuse

https://www.nst.com.my/business/2022/12/856743/hartalega-top-glove-out-fbm-klci-replaced-ammb-ql-resources

Posted by OTB > 2024-08-28 22:41 | Report Abuse

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.

Posted by Balian de Ibelin > 2024-08-28 23:11 | Report Abuse

low interest rates regime = recession, chips is a dump

Posted by Balian de Ibelin > 2024-08-28 23:12 | Report Abuse

both Nasdaq and Hang Seng committing suicide due to recession fears.

Posted by dragon328 > 2024-08-29 00:02 | Report Abuse

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.

Posted by OTB > 2024-08-29 10:30 | Report Abuse

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.

Posted by Aero1 > 2024-08-29 10:40 | Report Abuse

good morning dragon. can share your thought on the q2 nvidia results?

Posted by dragon328 > 2024-08-29 16:06 | Report Abuse

@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.

Posted by Aero1 > 2024-09-13 13:23 | Report Abuse

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?

Posted by dragon328 > 2024-09-13 14:26 | Report Abuse

@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.

Posted by Aero1 > 2024-09-19 09:31 | Report Abuse

hi @dragon, any call warrants expiring this month that the share price of ytl power still need to overcome?

Posted by Aero1 > 2024-09-19 16:37 | Report Abuse

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

Posted by dragon328 > 2024-09-20 11:32 | Report Abuse

@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.

Posted by Zhuge_Liang > 2024-09-20 11:38 | Report Abuse

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.

Posted by dragon328 > 2024-09-20 11:48 | Report Abuse

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.

Posted by Beta Ipoh > 2024-09-21 10:33 | Report Abuse

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?

Posted by dragon328 > 2024-09-23 08:56 | Report Abuse

@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.