Based on our understanding of the new US rulings on AI chips, we believe YTLP’s DC and AI infrastructure will not be affected, and YTLP could potentially accelerate the rollout of its remaining DC plots (as a preferred partner to global DC operators vs Chinese-related DC developers). YTLP’s planned 100MW AI infrastructure translates into c.55k GB200 GPUs (or 140k H100 GPUs equivalent), are well within the new US rulings. The rollout of the first 20MW AI infrastructure capacity remains on track for 2QCY25 (or 4QFY25). We remain committed to our BUY recommendation on YTLP with an unchanged TP of RM7.00 based on 10% discount to FD SOP (RM7.73), and the current share price retracement represent a good opportunity to accumulate.

US new rulings on AI. Recently, the outgoing Biden administration unveiled new export rules on advanced computing chips used for artificial intelligence (AI) under a three-tiered system by countries. Malaysia has been classified as a Tier 2 country, permitted to import only 50k GPUs (based on H100) over two years (from 2025 until 2026). G2G deals could bump up the cap to 100k GPUs. Additionally, DC operators with a Universal Validated End User (UVEU) status – e.g. Amazon, Google, Microsoft, etc – would be restricted to deploying a maximum of 7% of their computing capacity within any single Tier 2 country (outside their home country, provided at least 50% of their capacity is in their home country and 75% in Tier 1 countries). DC operators under the National Validated End User (NVEU) status – potentially YTLP – will be entitled up to 320k H100 equivalent GPUs over 2 years. However, the new rulings which have yet been finalized until 120 days later (comment period), could potentially be further modified or relaxed, under the new Trump administration. The new rulings have faced various backlashes, including from the tech industry (e.g. NVidia, SIA) and EU nations.

Potential positive for YTLP. Based on current available information, we believe YTLP will be a net beneficiary from the new restrictive policy. YTLP has a planned total 100MW AI infrastructure (under DC2), translating into c.55k GB200 GPUs (equivalent to c.140k H100 GPUs), which will be rolled out over the next few years. As one of the leading national AI infrastructure and DC developers in Malaysia, (i) YTLP can apply for the NVEU status in order to secure enough GPUs (if YTLP seeks to accelerate the 100MW within two years), or (ii) the Malaysian government enter into G2G deals with the US (if YTLP develops the 100MW over a longer 4-5 year period). Our analysis is inline with some of the market analysis and the media statement by the MD of YTLP, Dato Yeoh Sook Hong. YTLP remains on track to commence the first 20MW AI infrastructure in 2QCY25 (or 4QFY25). Existing DC1 (Shopee) and DC4 progress rollout are not affected by the new rulings. In fact, we anticipate that YTLDC will gain more interest (vs China-related DC developers) from global DC operators (e.g. Microsoft, etc.) and subsequently accelerate the rollout of its remaining DC plots.

Brabazon. YTLP has announced an investment of GBP2bn into Brabazon in UK, over the next five years. Currently, YTLP is redeveloping the site into a sustainable mix developments with 6,500 homes over 10 years. The first phase comprising 300 homes have already been occupied and currently, 240 homes are under construction. We believe the overall GDV to be >GBP4bn, which has not been accounted by the market.

Forecast. Unchanged, as we do not expect negative impact from the new US rulings.

Maintain BUY, TP: RM7.00. We remain committed to our BUY recommendation, with an unchanged TP of RM7.00 based on 10% discount to FD SOP (RM7.73). We believe the recent share price retracement presents a good opportunity to accumulate. Current negative stock sentiments are fuelled by over concerns, with lack of understanding and details on the new US rulings. Current valuation remains undemanding, given the strong earnings of SG PowerSeraya, earnings growth of UK Wessex and commencement of DC projects (including AI infrastructures).

Source: Hong Leong Investment Bank Research - 20 Jan 2025