• Malakoff Corporation has completed the signing of solar power purchase agreements (SPPA) for the development of rooftop solar energy systems for six companies in the DRBHicom Group.

• The six companies include CTRM Aero Composites Sdn Bhd, Hicom Automotive Manufacturers (Malaysia) Sdn Bhd and Isuzu Hicom (M) Bhd.

• The solar facilities will be installed under a build-own-operate-transfer contract as part of a 25-year SPPA.

• Upon completion, the facilities are expected to generate 18,836MWh of clean electricity per annum. These will neutralise about 13,072 tonnes of carbon emissions per year from the manufacturing industry.

• This development comes after Malakoff’s appointment of Solarvest Holdings as the solar PV systems contractor for three solar rooftop projects in June 2021. The generating capacity of the solar rooftop projects for Pos Malaysia, Northport and Johor Port is 10MW in total.

• We estimate the total generating capacity of the solar projects for the six companies in the DRB-Hicom Group to be 18MW. Currently, Malakoff’s effective generating capacity in Malaysia is about 5,822MW.

• As such, we do not expect earnings contribution from the solar projects to be significant. Inclusive of all of the solar rooftop projects, we believe that Malakoff would have almost 100MW of renewable asset projects. Most of these have not come onstream yet.

• We maintain HOLD on Malakoff with a DCF-based fair value of RM0.95/share.

Source: AmInvest Research - 15 Jul 2021