CIMB: Tighter US AI chip restrictions may impact Malaysian industry players

NST Thu, Mar 20, 2025 10:52am - 1 month View Original


KUALA LUMPUR: Potential tightening of AI chip export restrictions by the US administration under former President Donald Trump could pose risks for YTL Power International Bhd, according to CIMB Securities Research.

The research firm noted that new restrictions may include stricter identity checks and inspections to curb grey market exports or backdoor access to advanced GPUs via Tier 2 markets.

"During its second quarter (Q2) financial year 2025 (FY25) briefing, YTL Power said that it is still in talks with potential off-takers for its 80 MW second AI data centre (DC).

"While we believe that YTL Power should eventually be able to attain national validated end-user (NVEU) status (as the off-takers for its AI DCs are US hyperscalers), potentially tougher restrictions could introduce uncertainties and slow down talks with potential off-takers," CIMB Securities said in a note.

The research firm said it has scaled back the AI DC assumption in its forecast to 20 megawatts (MW), which YTL Power has affirmed is on target for commercial launch in July 2025.

"We will look to re-include the second AI DC into our forecast once we get a clearer indication that YTLP is closer to signing off-takers," it said.

Meanwhile, CIMB Securities said the firm continues to assume YTL Power will progressively lease out 188 MW of DC capacity on a co-location basis (20 MW of which is to its own AI DC arm).

It said the removal of the 80 MW second AI DC lowers its FY26 to FY27 core earnings per share (EPS) estimates by 6 per cent to 18 per cent, as the AI DC business is highly lucrative with an assumed 70 per cent EBITDA margin.

"Post revisions, we forecast YTL Power's core EPS to fall 10 per cent in FY25 (owing to lower Power Seraya earnings due to lower retail and pool prices), rebound 22 per cent year on year (YoY) in FY26 to a new record high, and then grow by a further 1 per cent YoY in FY27," it said.

Overall, CIMB Securities has lowered its target price (TP) for YTL Power by 17 per cent to RM4.30 from RM5.20, following its revised AI DC assumption.

"While the valuation is attractive, we foresee near-term share overhang arising from YTL Power's recently proposed bonus warrants exercise (to be completed by Q2 of the calendar year 2025, which is essentially a non-renounceable rights issue)," it added.

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