PublicInvest maintains ‘outperform’ on Malakoff
KUALA LUMPUR: Malakoff Corp Bhd’s recent earnings result is in line with Public Investment Bank Bhd’s estimates as the bank is expecting lower contribution from Segari Energy Ventures (SEV) due to lower levellised tariffs from the second half onwards.
“The first-quarter (1Q) financial year (FY) 2017 revenue was RM1.78 billion compared with RM1.34 billion in 1QFY16, accounting for 28.9 per cent and 28 per cent of our and consensus full-year estimates, respectively.
“There was no dividend declared for the period under review. We maintain our “outperform” call on Malakoff with unchanged target price of RM1.61,” said PublicInvest yesterday.
Malakoff ‘s net profit rose 17.5 per cent to RM98.8 million from RM84.1 million a year ago for the first quarter ended March 31, on a higher fuel margin and higher contribution from its associates.
Further, the investment bank said higher first quarter revenue was due to contribution from Tanjung Bin Energy (TBE).
“Capacity payment increased by 22.7 per cent year-on-year due to full contribution from the TBE plant compared with only 10 days’ contribution in the same quarter last year.
“Nevertheless, quarter-onquarter numbers were slightly lower by 1.9 per cent to RM683.3 million due to low demand from the Grid System Operator, which favoured new and more efficient plants in the northern region,” it said.
On prospects for the rest of the year, Malakoff cautioned that the results for FY17 will be affected by the expiry of its existing Segari Energy Ventures Sdn Bhd power purchase agreement (PPA) next month.
“The new SEV PPA, which will take effect upon expiration of the existing (one), stipulates lower levellised tariffs compared with the existing agreement,” it noted.
“Notwithstanding this, the group is continuing with its strategic initiatives to secure growth opportunities in the power sector, as well as to broaden its earnings base in complementary business sectors for the future.
“In addition, the group is focusing on enhancing efficiencies throughout its operations, and hence expects the results to remain positive for FY17,” said Malakoff in a filing with Bursa Malaysia. Zarina Zakariah
Malakoff Corp is continuing strategic initiatives to secure growth opportunities in the power sector.