Malakoff Corporation Berhad - Major LSS5+ Win
Thu, 04-Sep-2025 09:39 am
by Ong Tze Hern • Apex Research

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MALAKOF (5264)

Target Price (RM)

0.96

Recommendation

Buy

  • MALAKOF, via an 80:20 JV with SLVEST, has received a Letter of Notification from the EC to develop a 470MWac LSS plant in Perak under LSS PETRA 5+, with COD expected between 2027-2028.

  • We view the development positively, as it marks MALAKOF’s first sizable utility-scale solar asset in Malaysia, providing the Group with an additional source of recurring income.

  • No change to our earnings forecasts, as contributions are expected to begin in FY28, which is outside the forecast period.

  • Upgrade to Buy recommendation (from HOLD) on MALAKOF with a higher TP of RM0.96 (from RM0.91) after incorporating MALAKOF’s 80% stake in the 470MWac solar project into our SOP valuation.

 

470MWac LSS5+ Win. MALAKOF, via a consortium with SLVEST, received a Letter of Notification from the Energy Commission of Malaysia to develop a 470MWac large-scale solar photovoltaic (LSS) plant in Larut & Matang, Perak, under the LSS PETRA 5+ programme. The project will be undertaken through a special purpose vehicle (SPV), which will sign a 21-year solar power purchase agreement (SPPA) with TNB. The consortium is structured with MALAKOF holding an 80% stake and SLVEST 20%. The COD is expected between 2027 and 2028, in line with the EC’s rollout schedule.

 

Our take. We view the development positively, as it marks MALAKOF’s first sizable utility-scale solar asset in Malaysia, providing the Group with an additional source of recurring income. The project also aligns with MALAKOF’s goal of reaching an RE capacity of 1,400 MW by the year 2031. Applying a rule of thumb of RM2.2m/MWac based on solar module prices of USD0.09/watt, the estimated capex for the 470MWac plant is c.RM1bn. Assuming an 80:20 debt-to-equity financing structure, and dispatch tariffs of 13-16 sen/kWh (industry estimates), the project is expected to generate a mid-to-high single digit IRR. We estimate contribution to MALAKOF at c.RM10-15m/year in PATMI from FY28 onwards. SLVEST will most likely be the EPCC contractor for the job given SLVEST’s 20% stake in the asset.

 

Earnings Revision. No change to our earnings forecasts, as contributions are expected to begin in FY28, which is outside the forecast period.

 

Valuation & Recommendation. Upgrade to Buy recommendation (from HOLD) on MALAKOF with a higher TP of RM0.96 (from RM0.91) after incorporating MALAKOF’s 80% stake in the 470MWac solar project into our SOP valuation, alongside a three-star ESG rating. With rising domestic power demand, we believe MALAKOF is the frontrunner to secure new gas-fired plant PPAs under the Energy Commission’s recent RFP for up to 8GW capacity, given its position as Malaysia’s largest IPP and strong operational track record in managing gas-fired plants across Peninsular Malaysia.

 

Risks. Rapid plunge in coal prices, unplanned plant shutdowns, non-renewal of concession.

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