YTL builds it right

YTL Corp Bhd may be a diversified group, but it has long operated in relatively safer and more traditional business segments like power and utilities, and physical infrastructure.

In recent years, though, it has gained meaningful traction elsewhere, spotting opportunities and venturing into business segments in the digital space.

The group appears to have seen compelling growth from strategic corporate moves, including its business ventures in newer growth segments such as data centres (DCs).

Its investment into DCs came following opportunities brought by artificial intelligence (AI), which continues to drive many stock markets globally, including in Malaysia.

Also, the past few years have seen the group record respectable growth in both its top and bottom lines.

This trend appears to be more pronounced from its financial year 2021 (FY21) to FY24, when revenue grew by a compounded annual growth rate of circa 15% and pre-tax profits of circa 66%.

YTL Corp executive chairman Tan Sri Francis Yeoh says the group’s corporate moves today are the result of decisions made many years ago.

“The transition from physical to digital infrastructure began more than a decade ago when we rolled out the nation’s first 4G network. 4G was all about the introduction of cloud infrastructure, namely DCs.

“It was a difficult journey, but it has culminated in what we have achieved today,” Yeoh tells StarBiz 7.

“Our physical and digital infrastructure are grounded and bound together by our core competencies in engineering. A DC needs the key inputs of real estate, cement, power, water and fibre-optic telecommunications – encompassing all of YTL Group’s main businesses.

“So, we are blessed to have a keen understanding of what was needed when we decided to embark on the multibillion-dollar YTL Green Data Centre Park,” he adds.

The YTL Green DC Park in Johor is the largest renewable energy integrated DC park in Malaysia. It includes the development of up to 600MW of DC capacity, with the first data centre called Johor Data Centre 1, of which 72MW is already operational.

Yeoh points out YTL’s investments are not only into DCs per se. Instead, the company is now exposed to the wider AI ecosystem.

“I would also like to highlight that our pivot into digital infrastructure involves the full Al stack. This means we not only build the DC itself, but in partnership with Nvidia Corp, we can cover the entire value chain in Al infrastructure from operating the DC, generating computing power and creating tokens which are then sold to make Al applications,” he says.

“Our very own Ryt Bank, which we jointly own with Sea Ltd, is one of the customers using these tokens for its Al applications. This is what we mean when we say we have the full Al stack,” Yeoh explains.

Commenting on the group’s potential expansion plans, Yeoh says YTL is well-positioned to consider further mergers and acquisitions (M&As) should suitable opportunities arise in the future.

“We are ever grateful for our M&A opportunities. We are in no way in control of the timing and circumstances of how these opportunities came about,” Yeoh says.

“We are also in a very comfortable financial position after our recent warrants exercise. Do note that most of our debt is ring-fenced and project-financed, so all of the group’s cash reserves are unencumbered. So, we are well-positioned to pursue any M&A transactions,” he adds.

Yeoh also says the group does not discount monetising or spinning off parts of its business should opportunities arise.

“We will continue to evaluate such opportunities for the benefit of our shareholders. We have demonstrated before that we can monetise peripheral assets by disposing of idle or non-core assets at favourable valuations,” he says.

He points out that from 2021 to 2022, YTL undertook several asset sales, generating a total of RM3bil in capital gains.

These included the sale of its minority stake in ElectraNet in Australia, the Dama cement plant in China, and an idle landbank in Genting, which collectively amounted to RM4bil, he adds.

On succession planning, Yeoh says this has long been in the works, noting that the next generation understands the roles they will play and the contributions they will bring, not as owners, but as stewards of the YTL Group.

“They have been embedded under the mentorship of very experienced chief executive officers across our businesses in Malaysia and globally.

“At the right time, they will be able to fulfil their purpose as good stewards. Good stewardship encapsulates our group philosophy of ‘Building the Right Thing’ – at the right time and in the right way.

“The next generation is well grounded in this understanding,” Yeoh says.

Meanwhile, he says sustainability has long been part of the group’s ethos, even before it became a buzzword.

“Sustainability has always been part of our DNA. Since 2006, YTL Corp has had a dedicated sustainability team and undertook sustainability reporting well before it became mandatory.

“We have therefore been well prepared for increased regulation. We set ourselves internal targets to ensure our operations are well above required standards,” he says.

“There are many examples, but Wessex Water stands out. It has won the Queen’s Award for Sustainability for an unprecedented three times.

“In our cement business, YTL Cement is arguably at the forefront in adopting revolutionary carbon capture techniques into its operations,” he says.

Yeoh highlights Project ReCapt which chemically incorporates carbon dioxide (CO2) into concrete during production, effectively sequestering CO2.