KUALA LUMPUR (June 13): Maybank Investment Bank (Maybank IB) maintained its "sell" rating for Malakoff Corp Bhd (KL:MALAKOF) at 82 sen, with an unchanged target price of 55 sen, saying the stock's year-to-date price rally is unjustified.

Malakoff, closed down 4.5 sen or 5.55% to 77.5 sen on Thursday (June 12), valuing it at a market capitalisation of RM3.88 billion. Year-to-date, the stock had risen 22%.

In a note on Thursday, the research house said while Malakoff had returned to the black (following normalisation of fuel margins), there are near- and medium-term challenges with regard to concession expiries.

“Despite Malakoff’s Johor presence, the existing plants do not tangibly benefit from the data centre-led demand boost.

“In Malaysia’s power purchase agreement model for thermal plants, independent power producers receive capacity payments based on availability, and conceptually do not benefit from increased generation.

“Thus, the data centre-led demand boost is not going to lead to higher earnings for Tanjung Bin Power [TBP] and Tanjung Bin Energy, in our view,” the research house said.

According to Maybank IB, Malakoff’s dividend yields of less than 5% are no longer compelling, and the company's biggest earnings contributor, TBP, has only seven years of concession remaining.