KUALA LUMPUR (Feb 24): CGS-CIMB has maintained “add” on Malakoff Corporation Bhd at 70.5 sen with a higher target price (TP) of RM1.16 (from RM1.05) and said Malakoff’s core net profit for the financial year ended Dec 31, 2021 (FY21) was above estimates on higher-than-expected margins and contributions from associates, up 20% year-on-year.

In a note on Wednesday (Feb 23), the research house said Malakoff’s FY21 core net profit came in above expectations at 105% of house and 104% of Bloomberg consensus full-year forecasts due to higher-than-expected gross margins and contributions from associates.

CGS-CIMB said it expects Malakoff’s FY23-24 core net profit to grow on: i) steady performance of its power plants due to expected lower unplanned outages; ii) strong profit from Alam Flora due to business expansion and potential revision of tariffs; and iii) lower finance cost due to a lower gearing level.

“However, we project weaker FY22 core earnings to reflect the impact of the one-off Cukai Makmur.

“Our SOP-based (sum of parts) TP is revised to RM1.16 as we update its cash and debt amounts to end-2021.

“We like Malakoff given its improving earnings profile, [and with it being a] potential beneficiary of strong growth in national renewable energy capacity, and its decent dividend yield of more than 6% for FY22-24,” it said.

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