KUALA LUMPUR: AmResearch is maintaining its Buy call on Malakoff Corporation Bhd
with a Buy call.
It said on Wednesday Malakoff was expected to receive an official notification for the extension of Port Dickson Power’s power purchase agreement for three years this month, while its 2,100MW Tanjung BIN Energy plant was on track for commercial operation date (COD) in March 2016.
Meanwhile, Malakoff’s 90%-owned Tanjung Bin Power Sdn Bhd (TBP) was reported to be suing its Japanese boiler manufacturer for RM780mil.
TBP is seeking damages from IHI Corp Japan, ISHI Power Sdn Bhd, and ISHI Power Systems (M) Sdn Bhd for breaches of the duty of care owed to TBP.
Malakoff said the breaches have led to at least 22 different boiler tube failure incidents at the 2,100MW Tanjung Bin Power plant and the inability of the plant to meet certain require output conditions.
The total claimed is estimated at RM780mil. In addition, TBP is also seeking relief for loss and damage arising from the breaches (which includes costs of repair and replacement, economic losses including in relation to available capacity payment and daily utilisation payments, as well as interest and costs).
IHH Corp is the manufacturer and supplier of the boiler equipments, while the other two companies provide services to TPB (e.g. coal blending, maintenance, operations of boilers and mills).
“We believe the claims relate to the unplanned outage at the coal-fired plant in FY13- FY14, following a period of high utilisation when gas supply was limited. The outage had resulted in lower earnings for the group as it failed to earn full capacity payments. Nevertheless, operations have normalised since then.
“While we are hopeful for a positive outcome, there is no impact on Malakoff’s current operations – hence, we make no adjustments to our numbers,” it said.
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