RHB Research has maintained its BUY call on Malakoff Corp Bhd with an unchanged target price of RM1.00, citing improving earnings prospects following the full resumption of operations at the group’s Tanjung Bin Complex in Johor.
The target price implies about 29% upside, alongside an estimated FY2027 dividend yield of around 4%.
Following a site visit to Malakoff’s 2,100MW Tanjung Bin Power (TBP) plant, RHB said operations have returned to full base load after Unit 30 resumed service following the commissioning of its turbine rotor in August.
The research house expects TBP’s contribution to improve from 4Q26, with the reset of the unscheduled outage rate next year expected to restore full capacity payments.
RHB has consequently assumed a higher energy availability factor of 90% for 2027, compared with 50% this year, and a capacity factor of 77% versus 48% currently.
The coal jetty has also fully resumed conveyor belt operations following debris removal in June, with the final transhipment of coal by barge expected this month.
Malakoff is also preparing to begin a trial run of 5% biomass co-firing at TBP in 2027, using palm kernel shells supplied by four local vendors.
Management’s longer-term target is to raise the co-firing ratio to 15%.
RHB does not expect the initiative to contribute materially to earnings, but said it should help reduce the plant’s carbon emissions and could support Malakoff’s case for extending TBP’s power purchase agreement beyond its expiry in September 2031.
RHB made no changes to its FY2026-FY2028 earnings forecasts.
Its RM1.00 target price, which incorporates a 12% ESG discount, is based on 24 times FY2027 forecast earnings and reflects the expected earnings recovery as well as prospects from new gas-fired power generation projects.
Malakoff has reserved four turbines as part of plans to develop two new 1.4GW gas-fired power plants, one in Port Dickson, Negeri Sembilan, and another in Segari, Perak.
RHB said the timing would be appropriate given TBP’s PPA expiry in 2031.
The research house estimated that securing just one of the proposed 1.4GW gas-fired projects could potentially add 42% to its target price.
Key downside risks include unexpected plant outages, which could affect availability and capacity payments.
