Profit Boost For Malakoff From Melaka WTE Plant - Maybank IB

KUALA LUMPUR, June 20 (Bernama) -- Maybank Investment Bank Bhd (Maybank IB) projects that Malakoff Corporation Bhd will achieve RM40 million net profit accretion per year once the Melaka waste-to-energy (WTE) facility begins contributing over the 30-year operational period.

The investment bank said in a note today that Malakoff remains on the lookout for new projects and its 5.0 per cent dividend yield offers some downside support.

Maybank IB maintained its ‘hold’ call on Malakoff, with an unchanged sum-of-parts-based target price (TP) of RM0.75.

“Our earnings forecasts and TP of RM0.75 — based on a sum-of-parts valuation with each entity valued using a discounted cash flow approach — remain unchanged, pending the official commissioning of the WTE plant.

“We assume a 70 per cent payout ratio going forward, implying dividend yields of around 5.0 per cent,” it said.

Earlier, it was reported that Malakoff’s subsidiary Sungai Udang WTE Sdn Bhd had entered into a concession agreement on a public-private partnership basis with the Ministry of Housing and Local Government and the Solid Waste and Public Cleansing Management Corporation.

The concession period is 34 years from the effective date and is expected to commence in the second quarter of 2026.

Meanwhile, Public Bank Investment Bank Bhd (PIVB) has maintained its “neutral” call and TP of RM0.82 on Malakoff.

It noted that despite the positive development, the investment bank made no changes to its earnings forecasts as the commencement of operations falls beyond the current forecast period.

“We also view the guided high single-digit internal rate of return as reasonable, considering the substantial upfront capex required for the WTE facility,” it added.

-- BERNAMA