Malakoff is back in the black, posts RM39 net profit for 1Q

MALAKOFF Corporation Bhd, the nation’s largest independent power producer (IPP) and environmental services provider, posted its second consecutive quarterly profit, affirming its earnings recovery.

For the first quarter ended March 31, 2024 (1Q24), Malakoff posted a net profit of RM38.7 million on a revenue of RM2.280 billion compared to a net loss of RM99.1 million on a turnover of RM2.285 billion in the same period last year.

Malakoff counter has five ‘Buy’, five ‘Hold’ and one ‘Sell’ calls amongst analysts tracked by Bloomberg, with a 52-week consensus target price of 75 sen. It closed at 72.5 on May 30, valuing the company at RM3.6 billion.

For 1Q24, Malakoff recorded a profit after tax and minority interests (Patami) of RM62.2 million, up 182.2% from RM75.7 million of loss after tax and minority interests (Latami) reported in the previous corresponding quarter.

The surge in profit was primarily attributed to improved contributions from Tanjung Bin Power Plant (TBP) and Tanjung Bin Energy Sdn Bhd (TBE), given the lower weighted average coal costs following the stabilisation of global coal prices coupled with lower finance costs.

Additionally, the increase was aided by the absence of a share of loss from Al-Hidd Independent Water Power Plant (IWPP), a 40% foreign associate in Bahrain, and the lack of impairment loss on the group’s investment in Al-Hidd IWPP.

Malakoff’s 1Q24 revenue saw a slight decrease of 0.2% from 1Q23 primarily due to lower energy payment recorded from TBP and TBE power plants, reflecting the decline in applicable coal price (ACP). However, these were partially moderated by higher energy payment recorded from Segari Energy Ventures Sdn Bhd (SEV) given the higher despatch factor.

Within the Malakoff environmental solutions pillar, Alam Flora Sdn Bhd posted a Patami of RM21.8 million for the quarter under review, which is an increase of 3.3% from RM21.1 million reported in the previous corresponding.

On the operational front, Alam Flora’s total recyclable material collected increased by 17.8% in the period under review, testament to the positive impact of the Group’s efforts towards circular economy.

Malakoff MD/Group CEO Syahrin Abdul Ajib said alongside its expansion in the renewable energy (RE) sector, the group was also focused on ensuring the reliability and stability of its power plants to meet national energy security needs.

“As reported by the Grid System Operator, Peninsular Malaysia’s grid reached an all-time high of 20,028 MW on April 29, 2024, indicating increased demand and the need for higher dispatch to meet energy requirements. Additionally, the ACP has stabilised due to steady global coal prices, which has been advantageous for us. The recent announcement that IPPs can start selling electricity directly to consumers beginning in September will further benefit the Group as this allows us to sell electricity directly to customers using the ‘wheeling charges’ concept, particularly by leveraging our brownfield assets.

“As part of our efforts in ‘greening’ our thermal plants for responsible energy transition, the Group achieved a significant milestone this month by launching our decarbonisation initiative – the Biomass Co-Firing Project – at our 2,100 MW TBP power plant. Through this project, we aim to reach at least a 15% biomass co-firing ratio by 2027, which is estimated to offset a significant amount of carbon dioxide equivalent (“CO2e”) emissions, comparable to planting 142 million mature trees,” he said in a statement.

Malakoff also welcomed the Government’s move to introduce the National Biomass Action Plan 2023- 2030 (NBAP) to address the challenges of biomass distribution and pre-processing, despite its abundance.

“We hope that with sufficient support from the Government, we can achieve the National target of having 40% of the primary energy mix come from RE sources by 2035, which would reduce CO2e emissions by 10 million tons annually,” he said.

Recently, through its Malakoff Green Solutions pillar, Malakoff entered into a conditional share sale and purchase agreement with Zelleco Engineering Sdn Bhd to acquire a 51% equity interest in ZEC Solar Sdn Bhd and a 49% equity interest in TJZ Suria Sdn Bhd.

The acquisition was expected to immediately increase Malakoff’s RE portfolio to 168 MW, underscoring Malakoff’s strong support and commitment to advancing the National green and sustainable growth agenda.

In the environmental solutions sector, Alam Flora Environmental Solutions Sdn Bhd (AFES), a member company of Malakoff, has formed a partnership with City Oil Field Inc. (COF) to explore and identify business opportunities and environment sustainability in Malaysia by applying the new (non-traditional) pyrolysis technology method and equipment from South Korea developed, by COF, to treat plastic wastes in an eco-friendly manner.

It serves as a testament to the company’s pledge to employ innovative solutions for managing waste sustainably in Malaysia. — TMR