A challenging start
1Q22 results were below our/consensus expectations. The miss relative to
our forecasts was likely due to missed capacity payments at Tj Bin Energy
(TBE). Maintain HOLD with a lower MYR0.65 TP (-13%). We see current riskreward as being merely balanced. In the sector, we prefer YTL Power (YTLP
MK, BUY, CP: MYR0.76, MYR TP: MYR0.90).
Below expectation
Malakoff’s 1Q22 net profit of MYR51m (-16% YoY, +453% QoQ) represents
just 18/17% of our/consensus full-year forecasts. The QoQ spike was due
to a base effect (recall 4Q21 net profit was suppressed by a write-off of
Segari-related deferred expense, partly offset by a writeback in relation
to Alam Flora). The miss relative to our forecast was likely due to missed
capacity payments at TBE from extended outage. No dividend was
declared this quarter, consistent with past practice.
Likely due to TBE’s outage
Malakoff will only host its briefing this morning. Thus, the capacity
payment breakdown by plant remains unknown at the time of writing.
Nevertheless, we think there were likely missed capacity payments at TBE,
with management having previously flagged the continuation of TBE’s
unscheduled outage (down from turbine blade failure since early-Nov
2021) into 1Q22. Regulatory logs indicate that TBE resumed operations on
11 Feb 2022.
Lacking catalysts
We lower our FY22/23/24 net profit forecasts by 13%/1%/1% respectively
to reflect TBE’s outage. Our TP (based on a sum-of-parts with each entity
valued on a DCF assuming 8.9% WACC) is lowered to MYR0.65 (from
MYR0.75) to reflect both our earnings cuts and a higher discount rate (the
latest TBE outage has again brought Malakoff’s patchy record with plant
operations to the fore).