Week Ahead 18 May on YTL Power

US stocks rose Friday after Trump unveiled new tariff wrinkle.

After making progress on trade with the UK and China, the Trump administration appears to be running out of patience for striking case-by-case deals with the rest of the world.

President Trump said Friday that his administration could not meet with 150 counterparts seeking deals. Instead, he said, it will write to trading partners in the next two to three weeks, “telling people what they will be paying to do business in the US.”

Markets took the comments in stride and rallied into the afternoon. The Dow Jones, S&P 500 and Nasdaq were all at least 0.5% higher at Friday’s close.

After markets closed Friday, Moody’s Ratings downgraded the US government’s triple-A credit rating, citing large fiscal deficits and rising interest costs. The yield on the 10-year Treasury note rose to about 4.48% from about 4.45% in late trading.

Earlier, consumer sentiment came in at one of the lowest levels on record, a widely watched survey from the University of Michigan showed, while households are bracing for inflation to accelerate above 7%. “Uncertainty over trade policy continues to dominate consumers’ thinking about the economy,” the poll’s director said.

Other new data showed a weaker-than-expected rebound in housing starts. They rose 1.6% last month, while building permits fell by a steeper-than-feared 4.7%.

Even as trade anxiety casts a shadow on consumer sentiment, some investors are finding reasons for optimism. A strong first-quarter earnings season and the easing of US-China trade tensions have boosted investor confidence, said Alexandra Wilson-Elizondo, global co-head and co-chief investment officer of multi-asset solutions within Goldman Sachs Asset Management.

“If you put tariffs in the background, at least for the next 90 days, you start moving towards the budget, tax reconciliation and deregulation,” she said. “We still believe that there is plenty of variability and execution risk around all of this, but we do think the bulk of the bad news is behind us at this point.”

CoreWeave stock soars over 20% after Nvidia’s $900 million stake revealed

The Times of India, May 17, 2025

Shares of CoreWeave, the AI cloud computing company, surged more than 20% on Thursday, closing at $80.11, after an SEC filing revealed that Nvidia holds a $900 million stake in the firm. The revelation has sent ripples across Wall Street, boosting investor confidence in CoreWeave’s long-term potential amid the intensifying AI infrastructure boom.

The filing confirmed what industry watchers had long speculated: Nvidia, the AI chip leader, not only backed CoreWeave’s IPO but significantly increased its equity holding, signaling a strong bet on the cloud provider’s role in the next wave of AI development.

The rally was sparked by an SEC filing released Thursday that revealed Nvidia’s massive investment in CoreWeave. The disclosure showed that as of the end of March 2025, Nvidia owned 24.2 million shares of CoreWeave, then valued at $900 million. With CoreWeave’s stock up over 65% since it March IPO, Nvidia’s stake is now estimated to be worth nearly $1.6 billion, giving the chip giant a significant upside.

This latest jump comes just a day after CoreWeave reported 420% year-on-year revenue growth, surpassing analyst expectations and proving that the AI infrastructure demand continues to explode.

Nvidia’s investment strategy

Nvidia’s involvement with CoreWeave has been long in the making. The company played a crucial role in anchoring CoreWeave’s IPO, offering a $250 million order at $40 per share, when investor sentiment remained cautious due to a dry IPO market. CoreWeave ended up raising $1.5 billion during the offering.

The relationship is strategic. CoreWeave rents out Nvidia’s high-powered GPUs to clients building AI models - essentially extending Nvidia’s reach deeper into the booming AI development space without building its own cloud service. CoreWeave CEO Mike Intrator called Nvidia a “wonderful partner” and described their relationship as “symbolic” during post-IPO interviews.

Why this matters in the AI race

The AI boom is being powered by enormous compute demands, and companies like CoreWeave are crucial players in making that power accessible. With Nvidia’s GPUs at the core of most large-scale AI training tasks, its partnership with CoreWeave is as much about securing distribution channels as it is about investment.

By betting big on CoreWeave, Nvidia is diversifying its AI dominance, ensuring its chips are deployed across leading-edge cloud infrastructure tailored to AI workloads. This also provides Nvidia insulation from relying solely on major hyperscalers like AWS, Azure, or Google Cloud.

What’s next for CoreWeave

CoreWeave’s rapid growth - both in stock price and revenue - is drawing increasing attention from institutional investors. But with that growth comes heightened expectations. The company will need to prove it can sustain its expansion, scale operations efficiently, and maintain strong ties with Nvidia as competition in the AI cloud space intensifies.

For now, the market has spoken: CoreWeave isn’t just another AI company - it’s a rising infrastructure heavyweight, backed by one of the most influential tech players in the world.

My take: Investors were generally skeptical of CoreWeave’s prospects when it launched the IPO, especially after the emergence of DeepSeek. But with Nvidia’s backing and the continued support from US Big Techs, CoreWeave has grown its revenue by over 4 times year-on-year. Its stock price has doubled up since IPO.

YTL Power share price suffered similar fate after the emergence of DeepSeek in late January, with the share price having dropped from RM4.50 level to a low of RM3.00 by April. Once the AI data center starts contributing to YTL Power’s revenue growth from Q1 FY2026, I expect YTL Power shares to attract the attention of more institutional funds. By then, I hope the issues of US trade tensions and US debt roll-over will be resolved by large, and foreign funds will come back to Bursa in a big way helping to drive YTL Power shares to new highs.

Trump to speak to Zelensky and Putin – here’s what it means for peace in Ukraine

MSN news, May 17, 2025

Donald Trump has said he will speak with Russian President Vladimir Putin on Monday to discuss “stopping the bloodbath” in Ukraine.

“Hopefully it will be a productive day,” Trump said on his Truth Social platform, announcing the phone call with his Russian counterpart.

“The subjects of the call will be, stopping the ‘bloodbath’ that is killing, on average, more than 5000 Russian and Ukrainian soldiers a week, and trade,” he added.

The US President said he would then speak with Ukrainian President Volodymyr Zelensky and various members of the Nato alliance after the meeting.

Trump had earlier in the week dented hopes of a major breakthrough that the first meeting between Russia and Ukraine in more than three years on Thursday.

Winding up his tour of the Middle East, the US President warned that there would be no movement on ceasefire talks until he and Putin met.

Failed talks on Thursday

Trump’s interjection comes after Kyiv and Moscow failed to agree to a ceasefire at their first direct talks in more than three years, after previously meeting a month into Russia’s invasion of its neighbour.

The Russian delegation on Thursday, which did not include Putin, presented conditions that Ukraine described as “non-starters”.

Russia, meanwhile, expressed satisfaction with the meeting and said it was ready to continue contacts.

The talks in an Istanbul palace lasted less than two hours. Both countries said they had agreed to trade 1,000 prisoners of war each soon in what would be the biggest such exchange yet.

As soon as the talks ended Zelensky announced on X that he had spoken by phone with Trump and the leaders of France, Germany and Poland.

“Ukraine is ready to take the fastest possible steps to bring real peace, and it is important that the world holds a strong stance,” Zelensky said. He called for “tough sanctions” if Russia rejects a full and unconditional ceasefire.

Russia, which is slowly but steadily advancing on the battlefield and is worried that Ukraine will use such a pause to regroup and re-arm, has said it needs to nail down the terms of a ceasefire before signing up to one.

“We have agreed that each side will present its vision of a possible future ceasefire and spell it out in detail,” Russia’s lead negotiator, Vladimir Medinsky, told reporters after the meeting. “After such a vision has been presented, we believe it would be appropriate, as also agreed, to continue our negotiations.”

‘Detached from reality’: Russia-Ukraine peace talks finish in under two hours

Reuters, May 17, 2205

Ukraine and Russia have failed to agree to a ceasefire at their first direct talks in more than three years, with Russia presenting conditions that a Ukrainian source described as “non-starters”.

Under pressure from US President Donald Trump to end the bloodiest conflict in Europe since World War Two, delegates from the warring countries met for the first time since March 2022, the month after Russia invaded its neighbour.

The talks in a palace in the Turkish capital of Istanbul lasted well under two hours.

Russia expressed satisfaction with the meeting and said it was ready to continue contacts. Both countries said they had agreed to trade 1,000 prisoners of war each in what would be the biggest such exchange yet.

But Kyiv, which wants the West to impose tighter sanctions unless Moscow accepts a proposal from Trump for a 30-day ceasefire, immediately began rallying its allies for tougher action.

As soon as the talks ended, Ukraine’s President Volodymyr Zelensky held a phone call with Trump and the leaders of France, Germany and Poland, his spokesperson said.

Zelenskiy said robust sanctions should follow if Russia rejected a ceasefire.

Russia’s demands were “detached from reality and go far beyond anything that was previously discussed,” a source in the Ukrainian delegation told Reuters.

The source, speaking on condition of anonymity, said Moscow had issued ultimatums for Ukraine to withdraw from parts of its own territory in order to obtain a ceasefire “and other non-starters and non-constructive conditions”.

British Prime Minister Keir Starmer said the Russian position was “clearly unacceptable” and that European leaders, Ukraine and the US were “closely aligning” their responses.

European Commission President Ursula von der Leyen said the EU was working on a new package of sanctions against Moscow.

Russia’s lead negotiator, Vladimir Medinsky, told reporters that his team had “taken note” of the Ukrainians’ request for direct talks between Zelensky and President Vladimir Putin.

Putin, after proposing the direct talks, had spurned a challenge from the Ukrainian leader to meet him personally in Istanbul.

“We have agreed that each side will present its vision of a possible future ceasefire and spell it out in detail. After such a vision has been presented, we believe it would be appropriate, as also agreed, to continue our negotiations,” Medinsky said.

Ukrainian Foreign Minister Andrii Sybiha said the outcome was positive if only for the prospect of prisoners coming home.

“One thousand of our people … we managed to agree on their return. These are 1000 happy families. Even for this reason alone, it all made sense,” Sybiha wrote on Facebook.

Securing a ceasefire was not possible as Russia had sent “low-level” negotiators, he said.

Zelensky said Kyiv’s top priority was “a full, unconditional and honest ceasefire… to stop the killing and create a solid basis for diplomacy”.

The sides mostly repeated known positions. The Ukrainians wanted an immediate ceasefire and talks to ensue, while the Russians demanded more peace talks before agreeing on a ceasefire.

“If you want serious negotiations, you need to have guns silent,” Ukraine’s foreign ministry spokesman Heorhii Tykhyi told reporters.

Expectations for a major breakthrough, already low, were dented further on Thursday when Trump, winding up a Middle East tour, said there would be no movement without a meeting between himself and Putin.

Russia says it wants to end the war by diplomatic means and is ready to discuss a ceasefire. But it has raised a list of questions and concerns, saying Ukraine could use a pause to rest its forces, mobilise troops and acquire more Western weapons.

Ukraine and its allies accuse Putin of stalling, and say he is not serious about wanting peace.

The negotiating teams sat opposite one another on either side of a U-shaped table, with the Russians dressed in suits while half of the Ukrainians wore military fatigues.

A Turkish official said afterwards the atmosphere had been calm during the talks. No concrete timetable or location had been agreed for the next round of talks, the official said, with both sides needing to debrief their leaders first.

The Ukrainian source said the Ukrainians spoke in their own language, through an interpreter, although Russian is widely spoken and understood in Ukraine.

A Ukrainian and a European source said Russia had rejected a Ukrainian request for U.S. representatives to be in the room.

With Russian forces in control of about a fifth of Ukraine, Putin has held fast to demands for Kyiv to cede territory, abandon NATO membership ambitions and become a neutral country.

Ukraine rejects these terms as tantamount to capitulation, and is seeking guarantees of its future security from world powers, especially the United States.

Ukraine-Russia talks descended into confusion

The New York Times, May 16, 2025

Ukrainian and Russian delegations arrived in Turkey yesterday for what would be the first peace talks in three years, but they spent much of the day in different cities, questioning whether they would even meet.

President Vladimir Putin was absent, but he sent a midlevel delegation to Istanbul. Ukraine’s leader, Volodymyr Zelensky, went to Ankara to meet with Turkey’s president and said he would send a pared-down delegation to Istanbul, led by the defense minister.

Overshadowing it all was President Trump, who told reporters traveling with him on Air Force One in the Gulf region that “nothing’s going to happen until Putin and I get together.”

Russian and Ukrainian officials indicated that the talks in some form were still on, but that they could be postponed until today.

Context: Behind the chaotic diplomacy is Moscow and Kyiv’s wide divergence over how to end the war. Zelensky wants an immediate and unconditional cease-fire, followed by peace negotiations. Putin, who appears confident of Russia’s upper hand on the battlefield, is refusing to stop fighting before he gets what he wants.

Gaza dominates Arab League Summit as leaders push for ceasefire and pledge to work on reconstruction

Euronews, May 17, 2025

Arab leaders gathered in Baghdad on Saturday for the annual Arab League Summit, where they announced they were working on a ceasefire between Israel and Hamas in the Gaza Strip and vowed to contribute to the enclave's reconstruction.

The summit in the Iraqi capital was attended by Arab leaders including Qatar's Emir Sheikh Tamim bin Hamad Al Thani and Egyptian President Abdel Fattah el-Sissi.

Spanish Prime Minister Pedro Sánchez also attended as a guest, as did UN Secretary-General António Guterres.

The Spanish prime minister, who in a speech to the Spanis parliament on Wednesday called Israel a "genocidal state", urged the international community to apply pressure on Israel "to halt the massacre in Gaza."

Guterres called for the release of Israeli hostages in Gaza and the flow of aid into the territory, which has been under a total blockade by Israel for more than two months. He also said the UN rejects any "forced displacement" of Palestinians.

Iraqi Prime Minister Mohammed Shia al-Sudani called for allowing aid to flow back into Gaza, which has been under a total blockade by Israel since early March. "This genocide has reached levels of ugliness not seen in all conflicts throughout history," he said, adding that Iraq will work on setting up an Arab fund for the region's reconstruction which his country will pay $20 million for Gaza and a roughly similar amount for Lebanon.

Egypt's el-Sissi said that his country was coordinating with Qatar and the US in "exerting intense efforts to reach a ceasefire", and that Egypt plans to hold an international conference for the Gaza's reconstruction "once the aggression stops".

Palestinian President Mahmoud Abbas, who is leader of the Palestinian National Authority (PNA) in the West Bank and holds no authority over Hamas in Gaza, urged the militant group to hand over its weapons to the PNA.

A notable absentee was new Syrian President Ahmad al-Sharaa, who sent his foreign minister instead. Iraqi Shiite militias and political factions wary of al-Sharaa’s past as a Sunni militant pushed back against his invitation to the summit.

Al-Sharaa did nevertheless meet US President Donald Trump earlier in the week, who promised to remove US-imposed sanctions on Syria.

'Operation Gideon's Chariots'

The day before the summit took place, Israel announced the launching of a new announced a new phase in its Gaza offensive called "Gideon's Chariots", under which the IDF said it was "conducting extensive strikes and mobilising troops to achieve operational control in the areas of Gaza."

The UN Secretary-General responded to the news by saying he was "alarmed by reported plans by Israel to expand ground operations and more."

Separate to Israel's announcement of an expanded offensive, Euronews revealed the existence of documents dated December 2023 which revealed that creating a new entity in Gaza "the day after" a defeat of Hamas is one of the proposals the Israeli government has on the table.

The meeting in Baghdad was the 34th Arab League Summit, where Arab leaders gather to address regional matters. The League was formed in 1945 and currently comprises of 22 members.

Israel is razing Rafah, a place Gazans once fled to

The New York Times, May 16, 2025

Last year, a million Palestinians fled to Rafah, the southernmost city in the Gaza Strip, to escape the brunt of Israel’s bombardment in its war against Hamas. When Israel invaded Rafah, most of it was spared.

That is no longer the case: Israel’s military has destroyed extensive parts of the city since the cease-fire ended in March. Satellite images and videos analyzed by The Times showed buildings being razed with controlled demolitions and excavators. New military installations have gone up.

On the ground: Israeli military strikes killed dozens across the Gaza Strip yesterday, the Gaza health ministry said.

Malaysia committed to petrol subsidy cuts in second half of 2025, says MOF

Malay Mail, May 16, 2025

The government remains committed to reducing petrol subsidies in the second half of 2025 and is refining its implementation plan amid economic challenges, according to the Ministry of Finance (MOF).

“The government will continue to assess inputs and feedback in refining details of the RON95 subsidy rationalisation as it actively engages with a wide range of stakeholders,” a ministry spokesperson said in response to questions from Bloomberg News.

Prime Minister Datuk Seri Anwar Ibrahim announced in October last year that the government would introduce a two-tier pricing system for RON95 petrol in mid-2025. Under the plan, the wealthiest 15 per cent would pay market rates, while others would continue to enjoy subsidised prices, potentially saving the government RM8 billion annually.

“The government remains committed to implementing the RON95 subsidy rationalisation in the second half of 2025 and will share further details in due course,” the spokesperson added was quoted as saying.

In March, Anwar, who is also finance minister, assured Malaysians that the planned subsidy cut would not impact 80 to 90 per cent of the population. A recent drop in global oil prices has also eased the government’s path to implementing the policy.

The reduction follows a similar move last June when diesel subsidies were scaled back, boosting government revenue but coinciding with the ruling coalition’s loss in a by-election.

Second Finance Minister Datuk Seri Amir Hamzah Azizan said in April that Malaysia aims to reduce its fiscal deficit to 3.8 per cent of GDP this year, down from 4.1 per cent in 2024.

The government has delayed other reforms, such as a planned expansion of the sales and service tax originally set for May 1, but electricity tariffs are still expected to rise in July.

“The overarching objective remains clear — to ensure that most Malaysians continue to enjoy RON95 at a subsidised price while addressing the leakage of subsidies to foreigners, businesses, and the highest income earners,” the MOF spokesperson told Bloomberg News.

Earnings projection for YTL Power Q3

YTL and YTL Power may announce Q3 FY2025 results on Thursday May 22 (or less likely on May 29). I shall do a rough estimate of the net profit level achievable by YTL Power in Q3.

The Power Generation segment will see slightly lower profits in Q3 as PowerSeraya suffered from slightly lower generation market shares in Jan-Mar 2025, as one of the other Gencos was aggressive to grab market share and a new generator of 50MW (likely to be a solar power plant) came into the generating market in Dec 2024.

From a net profit of SGD183 million in Oct-Dec 2024 quarter (Q2 FY2026), PowerSeraya may see a lower net profit towards SGD170 million as I have earlier projected in the FY2025-FY2032 Earnings Projections for YTL Power. I forecast that PowerSeraya’s net profit will drop to SGD170m in Q3 and further to SGD160m in Q4 FY2026. Hence, a pretax profit of RM676 million is expected for the Power Generation segment in Q3 FY2025.

The Water & Sewerage segment will likely see steady profits in Q3 as in Q2 FY2025, as Wessex Waters should register stable earnings in past 2 quarters, before it sees a jump in earnings from 1st April 2025 when it revised up water tariffs as per the final determination by Ofwat for the new 5-year regulatory period. Ranhill Utilities may not see much improvement in earnings as it may take several quarters for YTL Power to rationalize its business operations and cost control. I expect similar level of pretax profit of RM60 million for this segment in Q3 FY25.

Telecommunications segment should see lower losses than Q2 (RM59.3m loss), as I expect the Sabah POP fibre project to deliver some project earnings in the quarter. Overall, I see lower loss of around RM42m in Q3 FY2025.

For the Investment Holdings segment, things are a bit tricky as this segment includes contributions from Jawa Power, Jordan Power, colocation data centre, Brabazon property business, digital bank and extraordinary items such as forex gains/losses.

Let’s look at these one by one.

Jawa Power and Jordan Power should be delivering steady pretax profit of RM170-180m every quarter, here I assume similar pretax profit of RM177m for Q3, same as in Q2 FY2025.

For colocation data centre business, I estimated that it registered a pretax loss of RM25m in Q2 FY25 as there was only 8MW of data centre in operations in Oct-Dec 2024 quarter. The second 8MW data centre has come into operations since early March 2025, hence I include one month of revenue contribution from this second 8MW in my projection for Q3. I am using similar assumptions as in Q2, i.e. revenue of RM390m a year for the entire 32MW for SEA Ltd, an EBITDA margin of 61.5%, depreciation charge of RM100m a year and interest expenses of RM60m a year. Hence, I calculate that this colocation data centre segment may register a lower pretax loss of RM20 million in Q3.

For Brabazon property, I assume similar number of houses sold, i.e. 100 keys handover, in Q3 as in Q2. Similar assumptions apply: depreciation charge of GBP20m a year and interest expenses of GBP20m a year, gross profit margin of GBP50k per house. Hence, I expect Brabazon to register a pretax loss of RM29m in Q3.

For the digital bank, Ryt Bank, I assumed a pretax loss of RM50m in Q2 FY25 due to initial start-up losses. I assume lower pretax loss of RM20m for Q3 FY25.

In Q2 FY25, there was an extraordinary item of RM134m for forex gain from shareholders’ loans to Jordan Power due to substantial strengthening of US dollar against ringgit as of 31 Dec 2024. As there was not much change in USD:RM forex from 31 Dec 2024 to 31 Mar 2025, I see negligible amount for this extraordinary item.

All in, I forecast a pretax profit of RM108 million for the Investment Holdings segment. I sum up the forecast pretax profit for each segment below:

Q3 FY25 Q2 FY25

Power Generation RM676m RM730m

Water & sewerage RM 60m RM 60m

Telecommunications (RM42m) (RM59m)

Investment Holding RM108m RM74m

Total Pretax profit RM802m RM805m

Extraordinary item 0 RM134m

Headline PBT RM802m RM939m

Applying an effective taxation rate of 17% across the business segments, as in Q3 FY24, I get a forecast net profit of RM666 million for YTL Power in Q3 FY2025, a small drop from RM681m in Q3 FY2024 but an increase from the core net profit of RM639m in Q2 FY2025.

The net short positions on YTL Power and IOIPG both increased by about 100k shares to 25.9m and 16.6m shares at close Friday.