PublicInvest Research

Malakoff Corporation Berhad - Above Expectations

Publish date: Mon, 29 Nov 2021, 10:35 AM
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An official blog in I3investor to publish research reports provided by PublicInvest Research team.

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Malakoff’s 3QYF21 core net profit came in at RM73.4m (+28.9% YoY, -40.7% QoQ) which beat our and consensus expectations. YTD, Group core net profit of RM277.1m (+10.3% YoY) is already 89% and 87% of our and consensus full year estimates primarily due to surge in the share of net profits in associates as operations resumed after the planned outages in 1QFY21. YoY, profits were also lifted due to higher energy payments recorded from Tanjung Bin Power Sdn. Bhd. (TBP) and Tanjung Bin Energy Sdn. Bhd. (TBE) on the back of higher applicable coal price (ACP). However, these were partially offset by lower energy payments recorded from gas plants namely Segari Energy Ventures Sdn. Bhd. (SEV), GB3 Sdn. Bhd. (GB3) and Prai Power Sdn. Bhd. (PPSB) given the decrease in despatch factor. All told, we adjust our FY21/FY22/FY23 profit estimates by +6%/+5%/+7% to factor in the better margins and higher contributions from associates/JV. Reiterate Outperform with DCF-based target price maintained at RM1.02

  • Local assets as a whole performed better due to increase in plant Equivalent Availability Factor (EAF) in both its coal-fired power plants and gas fired power plants. For coal-fired power plants, TBP’s EAF rose to 96% in 3QFY21 from 87% in 2QFY21 while TBE saw an increase in EAF from 94% in 2QFY21 to 100% in 4QFY21 due to zero unplanned outages. As for international assets, we understand that performance in 3QFY21 was mainly affected by some repair works in two of its assets while the remaining two performed as expected.
  • Alam Flora, another key profit driver. We understand that in the Environmental Services segment i.e. Alam Flora continues to be a key driver of the Group’s profits with a YTD contribution of RM75.8m, making up 31% of Group’s overall earnings. Total domestic waste collected in KL, Pahang and Putrajaya was still around 280k tonnes. However, waste handled was lower in 3QFY21 due to lower incoming tonnage from transfer stations, landfill and incinerators facilities. Elsewhere, recyclable material collected was higher by 5% YoY due to higher waste collected and various recycling programmes conducted during the quarter.

Source: PublicInvest Research - 29 Nov 2021

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