• Maintain BUY (TP: RM0.90). Malakoff 6MFY24 net profit of RM181mn was deemed inline with our estimate however above consensus at 50% and 67% respectively. 2QFY24 recorded earnings of RM103mn compared to a net loss of RM355mn in corresponding quarter ascribes to better contribution from its coal plant (Tanjung Bin Power Plant and Tanjung Bin Energy Plant), as the weighted average coal cost has stabilised. An interim dividend of 2.23sen/share was declared (vs 2Q23:1.5sen/share). We anticipate earnings to remain strong, supported by stability in global coal prices and the recent announcement of one-year PPA extension for its Prai CCGT plant. We maintain BUY call on Malakoff with an unchanged DCFderived TP of RM0.90. At current price, the stock offers with a total potential return of 12.3% including dividend yield of 4.8%.

• Earnings Revision. No changes pending management update.

• Outlook. The Newcastle coal price has remained flattish since 4Q23, traded below 150USD/MT as per pre-Russian-Ukraine invasion war (refer to Chart 1). In near term, we expect the group’s earnings to stay solid with its recent Prai’s one-year PPA extension with Tenaga. Notably, there is upside for it to get another one-year extension afterwards, depending on system requirements. Similarly, we foresee the higher despatch factor from its Segari Energy Ventures (SEV) during the quarter to continue, as gas will be the dominant transition source of fuel for energy transition agenda.

Source: BIMB Securities Research - 30 Aug 2024