| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Malakoff Corporation Berhad reported a core net loss of RM6.7mn for the fourth quarter of fiscal year 2025 (4QFY25), a figure that, while marking a 110% year-on-year decline, was “not as weak as expected.” This quarterly performance contributed to a full-year 2025 core net profit of RM146.5mn, down 44% year-on-year. Notably, this annual result surpassed both TA Securities’ and consensus estimates by 126% and 123% respectively, indicating a stronger underlying financial position than anticipated.
Performance Review
The 4QFY25 dip into the red was primarily attributed to the capacity payment (CP) loss and Availability Target Penalty (ATP) incurred by Tanjung Bin Energy (TBE). These penalties stemmed from a fire incident in October 2025 affecting TBE’s flue gas desulphurisation (FGD) and chimney tunnel. Additionally, Tanjung Bin Power (TBP) faced operational challenges due to a steam turbine generator failure during the period.
However, these headwinds were significantly cushioned by several factors. The company benefited from the recognition of insurance claims related to TBE’s fire incident, positive fuel margins generated from both TBE and TBP, and the reversal of coal Net Realisable Value (NRV). Furthermore, higher contributions from associate entities provided an additional buffer against the operational setbacks.
Future Outlook and Strategic Initiatives
Looking ahead, 4QFY25 is viewed by TA Securities as an earnings trough, with a gradual recovery projected from 1QFY26 onwards. TBE has already resumed operations on January 28, 2026, following successful restoration work and the implementation of an FGD system bypass. A new five-year contract block commencing January 2026 is expected to reset TBE’s unplanned outage rate (UOR), offering more flexibility for managing future operational issues.
Progress is also being made on other fronts. Repairs for the coal unloader (CUL) collapse incident at the Tanjung Bin Complex (TBC) jetty, which occurred in December 2025, are on track for completion by March 2026. Malakoff is also exploring ship-to-jetty coal transhipment as a contingency measure to mitigate any potential repair delays.
A significant positive development is Malakoff securing Power Purchase Agreement (PPA) extensions until December 2029 for an aggregate 2.1GW capacity across three power plants: SEV, Prai, and GB3. Preliminary estimates suggest these extensions could enhance earnings by up to 17%, with Prai’s Commercial Operation Date (COD) earliest in 2QFY26F.
Beyond the NewGen25 tender, Malakoff is actively negotiating with regulators to develop two new power generation assets in Negeri Sembilan and Kedah, with a potential aggregate capacity of 2.8GW. The group is also progressing with the development of a Waste-to-Energy (WTE) plant in Sg. Udang, Melaka, with construction expected to commence in 2QFY26. These initiatives underscore the company’s robust capacity replenishment prospects.
TA Securities maintains a “BUY” recommendation on the company, reflecting confidence in its operational recovery and strategic growth initiatives. The investment bank has set a target price of RM0.25.
