MALAKOF: Operational Challenges Weigh on Quarterly Results, Full-Year Performance Tops Internal Forecasts

The company experienced a challenging fourth quarter of fiscal year 2025 (4QFY25), reporting a core Loss After Tax and Minority Interest (LATAMI) of RM29.0 million. This marked a reversal from profits of RM28.2 million in 3QFY25 and RM48.7 million in 4QFY24, primarily due to significant operational setbacks. Despite the quarterly downturn, the full-year 2025 (FY25) core Profit After Tax and Minority Interest (PATAMI) of RM96 million notably exceeded the investment bank’s internal estimate by 32.1%, though it fell short of market consensus by 18.8%.

Performance Review

The core LATAMI for 4QFY25 was significantly impacted by a fire incident at the Flue Gas Desulphurisation (FGD) system of its Tanjung Bin Energy (TBE) facility in October 2025. This incident led to reduced energy and capacity payments, coupled with provisions for an Availability Target Penalty (ATP). While the outage period extended beyond the initial guidance of end-December 2025, the impact on financials was partially mitigated by the recognition of insurance claims during the quarter. Furthermore, the commencement of a new five-year contract block in January 2026 played a crucial role in resetting TBE’s unplanned outage rate (UOR) and restoring its availability headroom.

Operational Headwinds and Supply Risks

In addition to the TBE fire, the company faced another significant operational challenge with the collapse of the coal unloader (CUL 20) at the Tanjung Bin Complex jetty in December 2025. This incident caused damage to all three conveyor belts, severely disrupting coal handling operations and posing inventory risks for both Tanjung Bin Power (TBP) and TBE. While mitigation efforts are underway and the prohibition notice has been lifted, the repair works are targeting completion by March 2026. The interim constraints raise concerns over coal logistics. Current estimates suggest existing on-site coal inventory may only last for one to two months following TBE’s full operational resumption, indicating a manageable short-term supply risk but highlighting limited buffer capacity should further delays occur.

Future Outlook

Management has confirmed that TBE has successfully resumed full commercial operations following the restoration of its chimney flue-can and the implementation of a temporary FGD bypass system. However, the operational uncertainties and execution risks associated with ongoing asset restoration efforts continue to cloud the near-term earnings visibility. Continuous monitoring of inventory replenishment and the adherence to repair execution timelines remain key factors for the company’s operational stability moving forward.