Malakoff ended FY21 with a whimper after registering a weak 4QYF21 core net profit of only RM9.2m (-80.7% YoY, -87.4% QoQ). Group FY21 core net profit of RM286.3m (-4.2% YoY) only constituted c.87% and c.88% of our and consensus full year estimates. The earnings disparity is mainly due to write-off of Segari Energy Ventures Sdn Bhd’s (SEV) deferred expense, lower contribution from Tanjung Bin Energy Sdn Bhd (TBE) which was impacted by lower capacity payment and impairment of assets caused by plant outage as well as higher operation and maintenance costs. However, these were partially moderated by higher contribution from Tanjung Bin Power Sdn Bhd (TBP) on the back of higher applicable coal price (ACP) as well as higher contributions from Alam Flora Sdn Bhd (AFSB) and foreign investments in associates. Pending more clarifications on the higher operating expenses, earnings are kept unchanged for now. Maintain Outperform with DCF-based target price maintained at RM1.02.
- FY21 revenue rose 3% YoY to RM6.46bn, primarily due to higher energy payment from TBP on the back of higher ACP. This was partially mitigated by lower energy payments recorded from gas power plants given the decrease in despatch factor. Correspondingly, Group PBT rose 5.6% YoY to RM469.6m mainly attributed to higher contribution from TBP on the back of higher ACP as well as higher contributions from AFSB and foreign investments in associates. However, the profits were partially dragged by write-off of SEV’s deferred expense, lower contribution from TBE which was impacted by lower capacity payment and impairment of assets caused by plant outage as well as absence of TBE’s settlement agreement with Alstom Power System and GE Power Services (Malaysia) Sdn Bhd.
- Alam Flora, in the Environmental Services segment, contributed c.29% of Group FY21 PBT. We understand that the segment continues to make progress on the development of its Construction and Development Waste Facility (120 tonnes per day) in the state of Pahang which is expected to commence operations in the second quarter of 2022. Elsewhere, the Group has plans to expand its renewable energy (RE) portfolio with a long-term target of 1,400 MW by 2031. In October 2021, the Group signed a Solar Power Purchase Agreement (SPPA) with UMW Kayaba for a Rooftop Solar Project with a capacity of 1.25 MWp. Meanwhile, Malakoff also received a Letter of Award from Keretapi Tanah Melayu Berhad (KTMB) on 15 December 2021 for rooftop solar projects. To date, the Group has secured rooftop solar projects with a total capacity of 24.8MWp.
Source: PublicInvest Research - 24 Feb 2022