An unexpected miss
Dragged down by deferred expense write-off
4Q21 results were below our/consensus expectations due to an unexpected write-off of Segari’s deferred expense. Announcement of FY21 final DPS was again deferred. Maintain HOLD with a lower MYR0.75 TP (- 6%) following our earnings cuts, wtih risk-reward being merely balanced. In the power space, we prefer Mega First (MFCB MK, BUY, CP: MYR3.57, TP: MYR4.30).
Results below expectation
Malakoff’s 4Q21 net profit of just MYR9m (-78% YoY, -86% QoQ) brings FY21 net profit to MYR255m (-11% YoY), 80%/78% of our/consensus forecasts. The miss appears to be due to a c.MYR206m write-off in relation to Segari’s deferred expense. Just like last year, Malakoff intends to only declare its final dividend for FY21 upon the release of audited financials. For now, we expect Malakoff to maintain an 85% payout ratio for FY21.
Details lacking for now
Malakoff will only host its briefing this afternoon. Thus, details of the Segari write-off remain unclear for now. Partly offsetting the write-off was a c.MYR90-100m of incremental earnings from Alam Flora for reasons again unknown. Pertinent details such as the breakdown of capacity payment and associate income have not been disclosed, with the results commentary noting an outage at Tj Bin Energy in the quarter.
Lowering forecasts
We lower our FY22/23 net profit forecasts by 19%/11% respectively to reflect latest run rates and Cukai Makmur (c.11% impact to FY22 net profit), and introduce FY24 forecasts. Our TP (based on a sum-of-parts
with each entity valued on a DCF assuming 8.1% WACC) is lowered to MYR0.75 (from MYR0.80). With the long-tenured coal plants being major revenue contributors, Malakoff’s ESG standing is unlikely to improve materially in the near term.