Malakoff reported a headline net profit of RM90.3m (+34.5% YoY, -24.2% QoQ), though this was weighed by a one-off impairment loss on carrying value of its investment in Al-Hidd IWPP (40%-owned foreign associate in Bahrain) amounting to RM195m. Excluding this, 3QFY22 core net profit came in at RM285.3m (+>100% YoY, +>100% QoQ). Cumulative 9MFY22 core net profit of RM467.6m surpasses both our and consensus full year estimates at 146% and 149% respectively. The disparity is mainly due to higher than expected energy payments recorded from Tanjung Bin Power (TBP) and Tanjung Bin Energy (TBE) on the back of the higher applicable coal price (ACP), which resulted in higher than expected fuel margins. We adjust our FY22 estimates upwards by 51.5% though we expect profits to normalise in the coming quarters. Maintain our Outperform call with a DCF based target price at RM1.02.

• 9MFY22 revenue rose 63.3% YoY to RM7.4bn, primarily due to higher energy payments recorded from TBP and TBE on the back of the higher ACP. Correspondingly, Group profit before tax rose 42.1% to RM575.4m primarily due to higher contribution from TBP given the higher ACP and lower net finance costs. Group profits were partially offset by lower contribution from TBE, impacted by the reduction in capacity income following a plant outage caused by Low-Pressure Turbine blade failure. The RM195m impairment loss on carrying value of its investment in Al Hidd IWPP also weighed.

• Net Zero Carbon Emissions by 2050, which the Group aspires to achieve amid the country’s transition towards energy efficient sources such as gas and renewables. To this end, the Group will continue to focus on the growth of its sustainable business operations. The Group’s solar portfolio currently stands at 39 MWp, translating to a total carbon avoidance of 30,601 MT/year. To date, the Group has successfully achieved Commercial Operations for rooftop solar projects with a capacity of 11 MWp. Elsewhere, Alam Flora would be developing Port Reception Facilities (PRF) at various ports in Malaysia. At present, Alam Flora is developing an Integrated Eco-Recovery Waste Complex (IERC) in Port Klang which is targeted to be completed in FY23F.

Source: PublicInvest Research - 30 Nov 2022