PETALING JAYA: TA Research expects Malakoff Corp Bhd
’s financial year 2026 (FY26) to be a turning point after various setbacks that the independent power producer has experienced in FY25.
Its performance this year has been marred by negative fuel margins, its Tanjung Bin Energy’s (TBE) steam turbine crossover pipe leakage, a fire incident at TBE in October and the coal-lifting crane collapse case at the jetty of Tanjung Bin Complex (TBC) in Johor last Saturday.
TA Research, in a note to clients, said: “At this juncture, it is uncertain how long the coal-lifting crane will be out of service, but based on our visit earlier this year, we understand that up to two months of coal inventory is maintained at TBC.
“At this point, we do not expect any major disruption to the operations of both Tanjung Bin Power and TBE plants,” it said.
Taking cue from the earlier TBE fire incident, TA Research reckoned that the physical damages and potential business interruption were likely covered by the group’s insurance.
“Nevertheless, beyond the expected capacity payment loss from the TBE fire which will be reflected in Malakoff’s upcoming fourth quarter of FY25, we believe earnings trend could start reversing as the group recovers from the unexpected incidents, coupled with stabilising coal prices,” said the research house.
More importantly, Malakoff’s capacity replenishment prospects are improving on the back of the Energy Commission’s request for proposal (RFP) for gas power plant capacity, whereby the group had submitted proposals for both power purchase agreement (PPA) extensions and new combined cycle gas turbine (CCGT) power plants under categories one and two of the RFP respectively.
Meanwhile, an additional 2.8GW of proposed CCGT power plants in Kedah and Negri Sembilan are under negotiation with the regulators.
“As a yardstick, we estimate that every 1GW of new CCGT capacity secured could enhance valuations by about 30 sen per share, assuming 100% stake and a conservative 7% project internal rate of return on a 21-year PPA,” TA Research noted.
The research house has maintained a “buy” call on the stock with an unchanged target price of RM1.29.
“Any share price weakness presents a good opportunity to accumulate, in our opinion,” it said, adding that the valuation could re-rate higher given a tightening electricity market and improving prospects to secure new capacity.
