KUALA LUMPUR: CIMB Securities has maintained its core earnings per share (EPS) forecasts on Malakoff Corporation Bhd for financial year 2024 to 2026 (FY24-26) despite a strong core net profit (CNP) in the first half of 2024 (1H 2024).
The research firm said Malakoff's strong CNP of RM156 million in 1H beat its expectations at 69 per cent and Bloomberg consensus forecasts at 59 per cent, aided by land acquisition gains.
The current CNP was a turnaround fron 1H 2023 losses which led by fuel margin normalisation.
"We have not removed this non-core gain from our 1H 2024 CNP calculations pending clarity at its results briefing later," it said in a research note.
On the other hand, CIMB Securities said it is positive towards the power purchase agreement (PPA) extension received by Malakoff for its Prai Power Plant from Tenaga Nasional Berhad (TNB).
It stated that the Prai Power Plant is a 350MW (megawatt) combined cycle gas yurbine (CCGT) plant, with a 21-year PPA with TNB that had expired in June 2024 which now has been extended to Aug 31, 2025.
The PPA also provides the option to extend for an additional year, subject to system requirements at the time.
"We are naturally positive on this development as a one-year extension of its Prai Power Plant could increase our FY24 and FY25 core EPS by 2.3 per cent and 6.8 per cent based on our initial estimates," CIMB Secruities added.
Concurrently, the firm maintains its "hold" call on Malakoff with a target price of 78 sen, pending clarity on PPA terms for the new extension of its Prai Power plant and one-off gains from the land acquisition.
The firm noted that Malakoff is also in the midst of exploring or securing additional power plant capacity through a 22 MW waste-to-energy plant in Melaka and a 1.4 GW gas plant in Kedah, as well as through higher solar plant-ups.