KUALA LUMPUR: Kenanga Research has raised its earnings forecasts for Malakoff Corporation Bhd by 12 per cent for financial year 2022 (FY22) and 4.0 per cent for FY23 to reflect the lower depreciation charges and higher associate and joint venture (JV) incomes.
The firm said Malakoff's nine-month core profit of RM225.4 million beat its forecast at 80 per cent but only met market expectations at 72 per cent for the full-year estimate.
"The variance against our forecast came largely from lower-than-expected depreciation charges, and higher-than-expected share of profits from associate and JV.
"Its core earnings were adjusted for RM205 million gains arising from the difference between applicable coal price (ACP) and actual coal purchase price and RM195 million impairment loss on investment in Hidd Power Company," it said in a note.
Kenanga Research said Malakoff's nine-month core profit had dropped eight per cent to RM225.4 million from RM245.3 million despite revenue jumping 63 per cent which was due largely to higher ACP as fuel prices soared.
The weaker set of results was primarily due to lower capacity payment by RM142.5 million or 30 per cent from TBE unplanned plant outage arising from low-pressure turbine blade failure which lasted from the fourth quarter (Q4) of 2021 to Q1 2022.
"Meanwhile, while Alam Flora reported flattish profit after tax of RM62.5 million, associate and JV incomes rose 10 per cent to RM161.4 million mainly due to a 15 per cent hike in Shuaibah earnings on lower outages and operating costs," it said.
Kenanga Research maintained an "outperform" call on Malakoff with a target price of 94 sen.
"We like Malakoff for its stable concession earnings which could continue to sustain above average dividend yield of more than 7.0 per cent," it added.