MALAKOF: Power Sector Gains Momentum as NewGen25 Tender Awards Boost Capacity

The Energy Commission (EC) has announced the successful bidders for its NewGen25 gas-based power generation capacity tender, a competitive bidding exercise launched in May 2025. This strategic development is set to significantly bolster the nation’s electricity supply, addressing anticipated demand growth, particularly from new data centers, and ensuring overall system stability across the grid. The awarded plants are slated for commissioning in stages between 2026 and 2028.

Tender Highlights

The NewGen25 tender was structured into two distinct categories. Category I focused on short-term Power Purchase Agreement (PPA) extensions and capacity expansion, while Category II was designated for greenfield development. Under Category I, a substantial 4869MW capacity was awarded, with extensions secured until December 2029. Malakof Corporation Bhd emerged as the largest beneficiary in this category, securing a total of 2082MW involving its Prai, GB3, and SEV power plants. Following closely were Edra Global Energy Berhad with 1375MW and Tenaga Nasional Bhd (TNB) with 1262MW.

For Category II, a consortium comprising TNB and Aurora Power Generation Sdn Bhd was the sole recipient, awarded 1400MW of greenfield capacity under a 15-year PPA. It is understood that TNB will hold a majority stake in this significant consortium, further solidifying its presence in the new generation capacity landscape.

Analyst Outlook and Sector Recommendation

TA Securities views these awards as highly supportive of system capacity growth, crucial for meeting rapidly increasing power demand. However, the firm notes that a significant portion (78%) of the total 6269MW capacity awarded under NewGen25 comprises short-term extensions that will expire by end-2029, necessitating future long-term capacity replacements. Preliminary estimates by TA Securities suggest a positive earnings impact for key beneficiaries; Malakof could see up to a +17% earnings increase from its capacity extensions, while TNB is estimated to experience up to a +1.2% PAT impact from its PPA extensions and a more meaningful Net Present Value (NPV) impact from the 1.4GW greenfield CCGT project.

The investment bank maintains an OVERWEIGHT stance on the Utilities sector. This positive outlook is underpinned by several factors: persistent demand-supply tightness in the generation market, the ongoing build-out of new gas-based power generation capacity, record rollout of renewable energy (RE) projects, continued grid capital expenditure expansion to accommodate energy transition and demand growth, and potential expansion of gas supply infrastructure.

Key Recommendations and Risks

Within the sector, TA Securities has reiterated “BUY” recommendations for several key players. Tenaga Nasional Bhd (Target Price: RM15.80) and Malakof Corporation Bhd (Target Price: RM1.29) are highlighted as the primary listed beneficiaries from the NewGen25 tender, with further potential for new gas-based capacity awards. Additionally, Petronas Gas Bhd (PETGAS) (Target Price: RM20.58) is identified as a crucial proxy for the expansion of domestic gas supply infrastructure, aligning with the National Energy Transition Roadmap. Other “BUY” rated companies include Ranhill Utilities Bhd (Target Price: RM2.18) and Samaiden Group Bhd (Target Price: RM1.96).

Despite the generally positive outlook, TA Securities identifies several key risks to its sector call. These include unfavourable changes in policies favoring renewable energy and the broader energy transition, potential delays in project rollout, a possible spike in supply chain costs, and unscheduled plant outages that could impact operational efficiency.