RHB Investment Bank Bhd (RHB Research) and Hong Leong Investment Bank Bhd (HLIB) both maintained BUY calls on YTL Power International Bhd, with target prices of RM4.50 and RM5.08 respectively, citing strong contributions from the water segment and data centre operations as offsets to weaker Power Seraya earnings.

RHB Research noted that 1HFY26 (June) core earnings met expectations at 47–48% of both their and consensus forecasts, while tariff hikes at Wessex Water and Ranhill helped mitigate slower contributions from the Singaporean power unit.

YTL Power posted 2QFY26 core PATMI of RM587.2 million, down 6.2% quarter-on-quarter and 12.1% year-on-year, bringing 1HFY26 earnings to RM1.2 billion, a 16% decline from the previous year.

The easing decline at Seraya was partly cushioned by higher water revenues, lower telco losses from Sabah projects, and progress in data centre capacity.

Analysts highlighted that 62MW of data centre operations contributed approximately RM100 million to group earnings, with total secured capacity now at 188MW and ongoing negotiations for an additional 100MW.

Power Seraya’s performance softened on lower pool and retail electricity prices, though its profit margin held around 17%. Water operations remained resilient, with Ranhill and Wessex Water seeing tariff hikes that could rise further, supporting FY26F earnings.

The group is also advancing low-carbon and renewable projects, including 216MWp and 100MW LSS projects scheduled for completion by mid-2026 and 2027, and a potential 1.4GW gas-fired CCGT plant aligned with Malaysia’s electricity demand growth.

RHB Research reduced FY26F–28F earnings by 6–8% to reflect weaker Seraya contributions, while maintaining a 2% ESG discount for the group’s transition towards non-coal capacity and carbon credit purchases.

Analysts remain positive on YTL Power’s prospects, underpinned by the gradual recovery in power margins, steady water earnings, and the expanding data centre business.

Core PATMI for 1HFY26 remained broadly within expectations, and both banks continue to see YTL Power as a strategic play in utilities, water, and data centre sectors, with upside from potential new infrastructure projects.

As of 2.56 pm, the stock price decreased 3.09% to RM2.82.