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Tuesday, November 24, 2015

BIMB Securities maintains Buy on Malakoff, revises target to RM2.15

KUALA LUMPUR (Nov 24): BIMB Securities Research has maintained its “Buy” rating on Malakoff Corporation Bhd ( Valuation: N/A, Fundamental: N/A) at RM1.62 with a revised target price of RM2.15 and said Malakoff’s 3QFY15 net earnings jumped 44.3% year-on-year (y-o-y) and 80.8% quarter-on-quarter (q-o-q) to RM156 million.

In a note today, the research house said Malakoff’s 9MFY15 net earnings of RM346.2 million was above house expectation, making up 100.1% from house estimates and 80.68% from consensus estimates.

It said 3QFY15 revenue of RM1,283.6 million however, dropped 4.5% y-o-y and 0.9% q-o-q due to lower availability factor from Prai and Tanjung Bin Power Plant.

“Malakoff’s higher earnings was mainly due to lower finance cost following the redemption of the junior sukuk musharakah via the IPO proceeds and lower losses from Kapar Energy Venture (KEV).

“We revised our net earnings forecast for FY15 and FY16 to RM500.1 million and RM596.6 million respectively from the previous forecast of RM345.8 million and RM481.6 million.

“Hence, we have a new target price of RM2.15 (implying to PER 18x of FY16 PER) via the Dividend Discounted Model (DDM) valuation of WACC 6.0%,” it said.

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