[RAM] RAM Ratings upgrades YTLPI's ratings to AAA

RAM Ratings has upgraded the long-term ratings of YTL Power International Berhad’s (YTLPI or the Group) sukuk programmes. Concurrently, the outlook on the facilities has been revised to stable from positive. The short-term rating remains at P1 (Table 1).

The upgrade reflects sustained improvements in YTLPI’s fundamental operating and financial profile, underpinned by demonstrable strengthening in its core investments, as evidenced by the growth in the Group’s ROCE to around 9.0% over the past three years  (fiscal 2021: 3.6%). These improvements are supported by YTLPI’s sturdy track record in long-term, regulated concession businesses – primarily infrastructure and utilities – as well as its superior liquidity and financial flexibility, which provide substantial financial buffers and leverage headroom.

A strong turnaround in profitability from core power generation and water subsidiaries has propelled earnings, with operating profit before depreciation, interest and tax (OPBDIT) tripling over five years to reach a high of RM6.5 bil in fiscal 2024. The Group’s pre-tax profit now exceeds RM2 bil annually. The expansion into data centers and artificial intelligence, alongside contributions from its Jordan power plant and upcoming renewable energy assets, is expected to further diversify and grow earnings.

As an investment holding company, YTLPI relies on returns of investee companies – either through operating cashflows, dividends or capital gains from divestments – to support its ongoing operations and debt obligations. YTLPI’s company-level operating cash flow (OCF)-to-net-debt coverage ratio came in at a robust 2.71 times for fiscal 2025, and is expected to remain sound, despite a projected increase in debt for its digital business expansion. Annual dividend flows (around RM0.9 – 1.6 bil per annum) are expected to anchor its coverage ratios above the 0.30 times threshold to maintain AAA ratings. Furthermore, the Group’s announcement in early 2025 of a warrants conversion corporate exercise to expand its equity base and diversify funding of future investments should help reduce reliance on debt.

While the Group’s digital business and renewable ventures introduce execution risks, initiatives such as the green data centre park, artificial intelligence/cloud services and the hydrogen-ready plant in Singapore, present medium-term growth opportunities.

Table 1: YTLPI’s debt facilities


 

Analytical contacts
Neo Xue Wei, CFA
(603) 2708 8241
xuewei@ram.com.my

Davinder Kaur Gill
(603) 2780 8220 
davinder@ram.com.my

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Sakinah Arifin
(603) 2708 8212 
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