The YTL Power share price has lagged the broader market sharply, with the FBM KLCI down just 3% over the same stretch. CGS International says the correction may be excessive. The research house maintains its Add call on YTL Power with a target price of RM6.50.
Why Has the YTL Power Share Price Fallen So Sharply?
The sell-off was driven by concerns over global data centre investments, gas supply curtailments and scrutiny surrounding Nvidia and the AI chip supply chain. CGS International says these worries have overshadowed the resilience of the existing colocation data centre business, which forms the basis of its valuation.
How Much Can PowerSeraya’s Spark Spreads Add to YTL Power Earnings?
Singapore’s average spark spreads, which measure the profitability of generating electricity from natural gas, rose to S$135 per MWh between August and October 2026. That compares with S$35 per MWh in the first half of 2026.
Higher pool prices drove the jump, with the Uniform Singapore Energy Price averaging S$365 per MWh in October, against S$164 per MWh in the first half.
Only about 10% of volumes are exposed to spot prices. CGS International estimates an assumed average spread of S$100 per MWh would add RM35 million to quarterly earnings, about 8% of the group’s Q4 FY26 net profit.
The firm expects this to support an earnings uplift in the first half of FY27, alongside higher quarter-on-quarter volumes following maintenance shutdowns in the first half of 2026.
Can Stronger Margins Offset the Indonesia Gas Curtailment?
Indonesia accounts for about 30% of PowerSeraya’s gas supply. Its curtailment to Singapore could cost RM38 million in earnings in the second quarter of financial year 2027.
CGS International expects the impact to remain manageable, assuming affected volumes are replaced with liquefied natural gas at prevailing spot prices. Bulk retail contract renewals in early 2027 could also let PowerSeraya reprice its contracts and mitigate sustained cost pressures.
What Is YTL Power’s Gas Turbine Pipeline Worth?
YTL Power’s reserved gas turbines could support about 5.25 gigawatts (GW) of generation capacity. CGS International estimates a 1.4GW combined-cycle gas turbine plant could generate RM200 million to RM250 million in annual net profit.
- First three turbines: included in CGS International’s valuation at RM3.2 billion
- Remaining four turbines: excluded from the valuation, leaving room for upside
- All seven reserved turbines: RM750 million to RM950 million earnings contribution at project level
Does the RM6.50 Target Price Leave Room for Data Centre Upside?
CGS International’s data centre valuation assumes only 850 megawatts of capacity, well below YTL Power’s 2.4GW target pipeline. Its target price does not attribute material value to the group’s AI data centre plans.
Following the release of the FY26 Annual Report, CGS International raised its FY27 profit after tax and minority interests by 6.5%, while leaving longer-term forecasts unchanged. Investors tracking AI-linked names can compare screening tools in AI Stock Analysis for Malaysians.
What Catalysts and Risks Could Move YTL Power Shares?
CGS International names new colocation data centre contracts, combined-cycle gas turbine project wins and sustained Singapore electricity margins as key catalysts. These are the milestones worth monitoring on the YTL Power share price.
Downside risks include a slower data centre capacity ramp-up, weaker PowerSeraya margins and a resurgence in inflation in the United Kingdom.
Key Takeaways
- CGS International keeps its Add call with an unchanged RM6.50 target, 38.6% above the RM4.69 price.
- Spark spreads of S$135 per MWh (August to October 2026) compare with S$35 per MWh in the first half of 2026.
- The Indonesia gas curtailment carries a potential RM38 million earnings hit in Q2 FY27.
- The valuation excludes four reserved turbines and most of the 2.4GW data centre pipeline.
This article is for information only and is not investment advice. Do your own research before making any decision on YTL Power or any other Bursa Malaysia stock.
Frequently Asked Questions
What is the YTL Power share price target from CGS International?
CGS International maintains its Add call on YTL Power with an unchanged target price of RM6.50. That target represents a potential upside of 38.6% from the current price of RM4.69.
Why has the YTL Power share price fallen?
The share price has fallen 21% since end-September 2026, compared with a 3% decline in the FBM KLCI. Concerns over global data centre investments, gas supply curtailments and scrutiny of Nvidia and the AI chip supply chain drove the sell-off.
Will the Indonesia gas curtailment hurt YTL Power earnings?
CGS International estimates a potential RM38 million earnings impact in the second quarter of financial year 2027. Indonesia supplies about 30% of PowerSeraya’s gas, but the firm expects the impact to remain manageable if volumes are replaced with LNG at spot prices.
How much are YTL Power’s gas turbines worth?
CGS International’s current valuation includes the first three reserved turbines, valued at RM3.2 billion. If all seven turbines are deployed, the potential earnings contribution could reach RM750 million to RM950 million at project level.
Source: View Original Article — The content is based on the original publisher. Refer to the original content for accurate info. Contact us for any changes.
Related Articles & Resources
📊 On AI Stock Terminal: YTLPOWR quarterly results · YTLPOWR announcements
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.
Want to invest in Bursa Malaysia or US markets? Contact Dexter Chia, an AI Driven Remisier who has 2,300+ clients at Malacca Securities Sdn Bhd (M+ Global). M+ Global Invitation Code: UBZQ | WhatsApp: +60169059789 | Why Choose Dexter?
