• Malakoff Corporation announced that it has entered into a Concession Agreement with the Malaysia Government for the design, construction, operation and maintenance of a waste-to-energy (WTE) plant at Sungai Udang, Melaka.
• The WTE plant will process up to 1,056 tonnes per day of municipal waste and generate 22MW of electricity, which will be sold to Tenaga Nasional. The construction period is three years starting from 2QFY26.
• Assuming an estimated cost of US$7.5mil per MW, the WTE plant will cost about RM700mil. We think that Malakoff would have to borrow RM490mil based on a debt to equity ratio of 70/30. We believe that the WTE plant would be using Japanese technology.
• Assuming a tipping fee of RM90/tonne and a net profit margin of 8%, we estimate that the 22MW WTE plant would generate earnings of RM2.8mil. This would be about 1% of Malakoff's FY26F net profit. We do not expect any earnings contribution in the short-term as the WTE plant would only be completed in FY29F.
• We maintain HOLD on Malakoff with a target price of RM0.88/share. Our target price of RM0.88/share is based on a FY26F PE of 14x, which was the average PE in the past five years.

Source: AmInvest Research - 20 Jun 2025