MALAKOF (5264): Powering Up with Enhanced CRESS Adoption and New Tariffs
Summary (TL;DR):
- Research Firm: TA Investment Bank
- Subject: MALAKOF / MALAKOF (5264)
- Core Rating: BUY
- Target Price / Top Picks: MYR 1.08
- One-Liner: The new electricity tariff structure and potential carbon pricing are set to significantly enhance the attractiveness of Corporate Renewable Energy Supply Scheme (CRESS), benefiting Malakof’s expanding RE asset portfolio.
Report at a Glance
TA Investment Bank released its latest research report on MALAKOF on 2025-07-08, maintaining a “BUY“ rating with a target price of MYR 1.08. The core thesis of the report is that recent electricity tariff restructuring, coupled with the potential introduction of carbon pricing, will significantly increase the appeal of the Corporate Renewable Energy Supply Scheme (CRESS), driving higher demand for renewable energy and benefiting companies like Malakof with expanding RE asset portfolios.
Investment Thesis (The Bull Case)
- Point 1: The new electricity tariff structure, effective July 1, 2025, significantly increases fixed (maximum demand) charges for Medium Voltage (MV) consumers and variable energy charges for Ultra High Voltage (UHV) consumers (e.g., data centres), making grid power effectively more expensive for these groups.
- Point 2: This increase in grid power cost narrows the cost differential between conventional grid power and CRESS, thereby improving the attractiveness and adoption rate of CRESS.
- Point 3 / Key Beneficiaries: The potential introduction of carbon pricing from 2026 (estimated to add ~1.28 sen/kWh to grid power cost) will further narrow the cost gap, strengthening the case for CRESS. Malakof is a key beneficiary due to its expanding Renewable Energy (RE) asset portfolio. Other potential beneficiaries in the sector include RE EPCC players like SAMAIDEN, SLVEST, SUNVIEW, and PEKAT, as well as incumbent utility TENAGA.
Potential Risks (The Bear Case)
- Risk 1: Unfavourable changes to the regulatory and policy framework governing the power and utilities sector could impact the investment thesis.
- Risk 2: Not explicitly detailed in the report.
- Risk 3: Not explicitly detailed in the report.
Financial Forecast Summary
The analyst’s financial projections for the coming years are as follows:
| Fiscal Year (YE to Dec) | FY2025F | FY2026F | FY2027F |
|---|---|---|---|
| Revenue (RM mil) | N/A | N/A | N/A |
| Net Profit (RM mil) | N/A | N/A | N/A |
| EPS (sen) | 6.28 | 6.42 | N/A |
| DPS (sen) | 5.0 | 5.1 | N/A |
| Dividend Yield (%) | 5.8 | 6.0 | N/A |
| P/E Ratio (x) | 13.7 | 13.4 | N/A |
(Source: TA Investment Bank research report)
Valuation & Target Price
| Rating | BUY |
| Last Close Price | MYR 0.86 |
| Target Price (TP) | MYR 1.08 |
| Valuation Methodology | The report does not explicitly detail the valuation methodology for the target price, but notes that total return includes share price appreciation, ESG rating adjustments, and gross dividends. |
Analyst’s Conclusion
- Overall Stance: TA Investment Bank maintains an “Overweight” call on the Power & Utilities sector and a “BUY” rating on Malakof, anticipating increased demand for renewable energy and energy storage due to the new tariff structure and upcoming carbon pricing.
- Key Catalyst/Strength: The narrowing cost differential between CRESS and grid power, driven by new tariffs and future carbon pricing, is the primary catalyst for increased RE adoption, directly benefiting Malakof’s RE portfolio.
- Major Headwind/Risk: Unfavourable changes in the regulatory and policy framework are the key risk to the positive outlook.
- What to Watch: Investors should monitor the effective implementation of the new tariff structure, the details and timeline of Malaysia’s carbon pricing regime, and the resulting acceleration in CRESS adoption.
Disclaimer: This article is a summary and interpretation of a research report published by TA Investment Bank on 2025-07-08. All information is for reference purposes only and does not constitute investment advice. Investors should conduct their own independent research and due diligence and assume all associated risks.
