Malakoff’s Tanjung Bin power plant in Johor
PETALING JAYA: There is upside potential to independent power plant operator Malakoff Corp Bhd
’s share price despite the temporary setback from a fire at the company’s Tanjung Bin power plant located in Pontian, Johor, reported last Thursday and following a power purchase agreement (PPA) announced last Friday.
Analysts believe the market has not really priced in Malakoff’s pipeline of projects coming onstream, which includes mini hydro and waste-to-energy (WTE) plants.
TA Research believes the stock remains “deeply undervalued as the current share price has yet to reflect its pipeline of incoming assets over the next four to five years”.
It has maintained a “buy” call on the stock and raised the target price (TP) to RM1.39 from RM1.04 after factoring in the upcoming mini hydro 84MW plants in Kelantan, a 470MW large-scale solar programme 5+ (LSS5+), LSS Sarawak (located in Bintulu and announced last Friday) and WTE assets into the valuation.
CGSI Research said the Sarawak project added a new recurring income stream and lifted the company’s secured renewable energy (RE) capacity while further shifting its earnings towards cleaner energy.
The company, under the “Malakoff 2.0 Strategic Transformation” rolled out in 2021, has a goal of reaching 1,400MW of RE capacity by 2031.
The brokerage said investors should accumulate on share price weakness and sees the share price pullback from the fire incident as an opportunity to accumulate despite the subdued sentiment and near-term share price performance until more clarity comes on repairs to the Tanjung Bin plant.
It has an unchanged “add” call with a target price (TP) of RM1.20.
“We see meaningful upside supported by a pipeline of unpriced new assets – mini hydro and WTE, its stake in E-Idaman (unlisted), as well as potential extensions of expired/expiring three power plants.
“In our view, Malakoff is also well-positioned to secure new gas-fired power contracts,” it added.
Kenanga Research has maintained an “outperform” call on the stock with an unchanged TP of RM1.05 but cautions that “improvements in risk management are needed to mitigate unnecessary volatility from issues such as unplanned outages”, in regard to the Tanjung Bin fire incident.
“On the flip side, strong electricity demand is creating opportunities for new plant developments and PPA extensions, positioning Malakoff to benefit meaningfully,” the brokerage said.
