Latest news with #RM580mil
The Star
03-08-2025
- Business
- The Star
New projects to drive Malakoff's growth outlook
PETALING JAYA: A confluence of new project bids is putting Malakoff Corp Bhd back on investor watch lists after having been below the radar in recent years, analysts say. Firstly, they see the Malakoff standing a strong chance in securing short-term extensions for its power plants, which power purchase agreements (PPAs) are expiring soon. About a month ago, the government had invited interested companies to submit proposals for the supply of electricity for the 2025 to 2029 period under two categories, one being the extension of contracts for of existing gas-fired power plants with expiring or expired PPAs. UOB Kay Hian Research (UOBKH Research) said it understands that Malakoff has submitted proposals to extend the operations of three of its gas-fired plants – Prai, Segari and GB3 – under this category. The other category the government opened bids for is for the development of new gas-fired power plants. The research house said it expects Malakoff to win a 1,400MW gas-fired power plant as the group has idle land in Port Dickson, following the retirement of the Port Dickson power plant in 2019. 'A decision by the government is expected by September or October, and we expect positive news. 'The potential award for a new gas-fired power plant is worth 22.5 sen a share or around 25% of Malakoff's market capitalisation, assuming a 9% internal rate of return for the project,' UOBKH Research said in a report. The research house has a RM1.08 target price on the stock. On the group's waste-to-energy (WTE) plant in Sungai Udang, Melaka, UOBKH Research expects the project to achieve financial close by mid-2026. Construction of the facility will begin after that and will take about three years. 'The project cost is estimated at RM580mil to RM660mil. The PPA is over a period of 21 years but the waste collection concession is over 34 years. This contract win is positive for Malakoff as the group embarks on its renewable energy (RE) journey,' said UOBKH Research. Notably, this will be Peninsular Malaysia's third WTE facility. Another 10 to 15 WTE facilities are expected to be developed in the coming years as the country ramps up its waste management and RE infrastructure. The research house noted that the group's wholly-owned subsidiary Alam Flora Sdn Bhd, which is one of the largest concession holders for solid waste management in the country, has a healthy concession worth RM2bil based on a run-rate net profit of RM100mil annually 'Alam Flora has been dishing out dividends during the past two years and will likely support dividends in 2025 to 2026. We understand that Alam Flora is exploring new concessions in other states within Peninsular Malaysia.' Alam Flora currently operates in Kuala Lumpur, Putrajaya and Pahang. Meanwhile, for the second quarter of this year (2Q25), the research firm expects a possible rebound in Malakoff's earnings as rising coal prices could lead to a reversal of previous coal inventory write-downs. 'Recall that 1Q25 net profit was adversely affected by a RM40mil provision for coal net realisation value (NRV) for the period of January to May. About 80% of the NRV came from Tanjung Bin Power Plant itself. We expect at least a normalised net profit of RM70mil per quarter in the absence of coal provisions,' UOBKH Research said.
The Star
15-07-2025
- Business
- The Star
Econpile likely to surpass FY26 job-win target
PETALING JAYA: Piling specialist Econpile Holdings Bhd is expected to beat its new job wins target of RM400mil for its financial year ending June 30, 2026 (FY26) with the rollout of more government infrastructure, data centre, and industrial building projects, analysts say. Barely two weeks into its new financial year, analysts said the group is off to a good start with its second job win, a RM98.2mil contract from Eastmont Sdn Bhd to undertake bored piling works, basement construction and pile cap works within a proposed industrial development in Kapar, Klang. CGS International Research (CGSI Research) said in a report that with the new job, Econpile's FY26 new wins already total RM125mil, which is 31% of its target of RM400mil, bringing its order book to RM580mil as of last month. 'This is assuming revenue recognition of RM90mil in the fourth quarter of its FY25 (4Q25).' The gross profit margin for the latest project, which is estimated at 10%, is similar to Econpile's existing piling residential projects, the research house noted. On July 9, Econpile also announced a RM27mil piling and pile cap works contract from Bayu Melati Sdn Bhd for a proposed serviced apartment project with two 37-storey blocks in Selangor. CGSI Research said, 'More importantly, we believe the group's projects have no more lingering legacy issues.' Earlier this year, Econpile had faced some issues with a project in Mont Kiara, Kuala Lumpur, and road upgrading work in Pahang, which have since been gradually resolved. 'As such, we expect earnings to show some recovery in 4Q25, and then become more apparent in FY26 when recognition of most of its projects picks up steam,' the research house noted. CGSI Research reiterated an 'add' call on the stock with a target price of 46 sen per share. 'We like Econpile as a key beneficiary of a revival in government infrastructure spending as, according to the company, it has the largest number of bored pile machines in Malaysia currently.' Meanwhile, RHB Research said in a note to clients, 'Given that the majority of Econpile's contracts pertain to property development, the latest win indicates the group's comeback in the industrial space.' The research house estimated the group's current order book at RM570mil, while FY26 year-to-date job wins stand at RM125mil versus its full-year job win target of RM600mil. The group's tender book stands at about RM1bil, comprising jobs in both the private and public sectors. 'Profitability-wise, we expect the gross profit margin for this latest job to be between 5% and 8%,' it noted. RHB Research, which maintained a 'buy' call on Econpile, set a new target price of 48 sen per share. The research house added that the icing on the cake would come from the group's securing newer packages from infrastructure jobs with higher margins such as the Penang Light Rail Transit or the upcoming Johor Baru Elevated Autonomous Rapid Transit projects. The research house is also upbeat about the group's track record in infrastructure jobs compared with other piling contractors.
