KUALA LUMPUR : Malakoff Corporation Bhd is poised to realise an estimated RM40 million in annual net profit accretion over a 30-year period once its Melaka waste-to-energy (WTE) facility begins operations, according to Maybank Investment Bank Bhd (Maybank IB).
In a research note issued today, Maybank IB stated that the contribution from the Melaka WTE plant is expected to provide a significant long-term uplift to Malakoff’s earnings. The investment bank has maintained its ‘hold’ recommendation on the stock, with an unchanged sum-of-parts (SOP) based target price of RM0.75.
“Our earnings forecasts and TP of RM0.75, based on a SOP valuation methodology with each segment assessed using a discounted cash flow approach, remain unchanged pending the official commissioning of the WTE facility,” Maybank IB said. It added that the projected 70 per cent payout ratio implies dividend yields of approximately 5.0 per cent, offering downside support for investors.
Malakoff remains actively engaged in identifying new project opportunities, and the upcoming WTE project is seen as a step forward in strengthening its long-term sustainability agenda.
The WTE plant will be operated by Malakoff’s wholly-owned subsidiary, Sungai Udang WTE Sdn Bhd, under a public-private partnership concession agreement with the Ministry of Housing and Local Government and the Solid Waste and Public Cleansing Management Corporation. The concession period spans 34 years from the effective date and is scheduled to commence in the second quarter of 2026.
Public Investment Bank Bhd (PIVB) has also reiterated its ‘neutral’ rating on Malakoff with a target price of RM0.82. PIVB noted that while the development of the Melaka WTE project is a positive step, no adjustments have been made to its earnings forecasts as the facility’s commissioning is beyond the current projection horizon.
PIVB also commented that the project’s guided high single-digit internal rate of return is reasonable in light of the significant upfront capital expenditure involved.
-Bernama
