Maybank Investment Bank Bhd (Maybank IB) projected Malakoff Corporation Bhd to be loss-making in FY23 due to hefty negative fuel margin incurred to date.
“This in turn, could negatively affect the near-term dividend outlook, in our view,” it said today (Jan 2).
Thus, the research house maintains its SELL call and its net profit forecasts, with RM0.52 TP (based on a sum-of-parts with each entity valued on a DCF assuming 8.9% WACC).
In term environmental, social and governance (ESG) 2.0, Maybank IB said Malakoff’s overall ESG score is 50 (out of 100), which makes its ESG rating average under our proprietary ESG scoring methodology.
It added aside from having an established framework, internal policies and tangible mid and long-term targets in relation to ESG, Malakoff also has clear ESG targets.
“With the long-tenured coal plants namely Tanjung Bin Power station (Tj Bin Power) and Tanjung Bin Energy (Tj Bin Energy) power plant, (concession for the latter to expire in 2031) being major revenue contributors, Malakoff will have to contend with the environmental stigma for the considerable future,” it said.
The research house said plans for renewable diversification are already underway, with the group targeting to accumulate 1,400 MW of RE capacity by 2031, and exploring co-firing and fuel switching technologies.
“Malakoff also aims to achieve a 30% reduction in emissions by 2031 and net zero by 2050,” it said.
Maybank IB said Malakoff also have relatively low female representation.
“We note (that) female representation among management is low in the utilities space (which between 10 and 15% for management) and just one female director on the board. There are (also) no immediate plans to raise female representation on the board,” it said.
It added, on governance, the main related-party transaction of contention has been the acquisition of Alam Flora (which required and received shareholders’ approval) from sister company DRB-Hicom Bhd for RM869 million in 2019.
