Malakoff to see higher net renewable portfolio coming from three hydropower plants in Kelantan

Malakoff to see higher net renewable portfolio coming from three hydropower plants in Kelantan

22 Mar 2023

The potential development of three hydropower plants in Kelantan is expected to increase Malakoff Corp Bhd’s net renewable portfolio to about 100 megawatts (MW), said RHB Research.

To recap, Malakoff signed a heads of agreement (HOAs) with Rising Promenade (RPSB), RP Hydro (Kelantan) (RPHK), and Rising O&M Engineering Services (ROMES) to develop, own, operate, and maintain three renewable hydroelectric energy (RE) plants in Kuala Krai, Kelantan.

These three small hydropower plants or SHPs—Kemubu (29MW), Kuala Geris (25MW), and Serasa SHP (30MW) MW)—have a combined installed capacity of 84MW.

RHB Research is optimistic about the potential development of three hydropower plants in Kelantan with a combined installed capacity of 84MW.

“This would increase Malakoff Corp’s net renewable portfolio to 100MW, in line with its long-term target of 1,400MW by 2031,” the bank-backed research firm said.

Following the series of HoAs, which are expected to be completed within the next three months, RHB Research said Malakoff would have 70 per cent of the ordinary shares in RPHK and operations and maintenance company ROMES.

“It will also progressively inject RM250 million into RPHK for preference shares,” it said.

Pending further details, RHB Research has maintained its earnings estimates on Malakoff.

Based on its preliminary calculation, the firm said these assets could add an average net profit of RM30–35 million per year and potentially be valued at two sen per share.

“These are based on RM1.2 billion in capital expenditure (capex), a 70 per cent equity stake, an 80:20 debt-equity ratio, and a seven per cent weighted average cost of capital (WACC).

“We keep Buy on Malakoff with an 86 sen target price,” it added.

Source: NST