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PETALING JAYA: Surging power demand has strengthened Malakoff Corp Bhd
’s prospects in securing new power plants, thereby solidifying its long-term earnings prospects.
The group is in advanced stages of dicussions on new power assets including a new gas plant in Kedah and another to be potentially located in Port Dickson, Negri Sembilan, with a combined capacity of 2.8GW, said CGSI Research.
Based on the last published Power Generation Development Plan, 6.4GW of new combined-cycle gas turbine (CCGT) capacity is expected to come on-stream between 2024 and 2030.
Some 4GW of the new CGGT capacity scheduled for operations in 2029 to 2030 is pending award.
TA Research said Malakoff stands a good chance to compete for new capacity, capitalising on readily connected sites from previous (expired) power plants such as PD Power in Port Dickson and GB3 in Manjung.
The group is said to be in negotiations with the regulators for up to 2.8GW of new CCGT capacity.
This is besides communication with the regulators regarding a potential recommissioning of the 640MW GB3 power plant (expired in 2022) with negotiations revolving around the plant’s technical feasibility for extension, potential tariffs and major refurbishments required if a longer-term extension is required.
The research house noted increasing electricity demand from the influx of data centre infrastructure in the country could accelerate new plant-ups, which broadly improves capacity replenishment prospects for the group.
It also estimated that every 1GW of new CCGT capacity secured could enhance Malakoff’s valuations by about 20 sen a share, assuming 6% to 7% projected internal rate of return (IRR).
A tight demand-supply condition in the electricity market could lead to better-than-expected IRR, which spells further upside.
TA Research has maintained a “buy” call on the stock with an unchanged target price (TP) of RM1.06 a share, given improving capacity replenishment prospects.
CGSI Research has reiterated an “add” call with a TP of RM1.30 a share.
The rerating catalysts include announcements on final investment decisions for projects in the pipeline, repowering of existing power assets, and recovery in its dividends in 2024. The downside risks are return of negative fuel margins and unplanned plant outages.
RHB Research has maintained a “buy” call on Malakoff with a new TP of RM1.02 a share. It said the group has 5.3GW of thermal capacity and targets to achieve 10GW by 2031.
