Malakoff's Potential Earnings Upside: Bids for Power Plant Extensions and New Greenfield Plants

Malakoff Corp Bhd has submitted bids to extend power purchase agreements for its gas-fired power plants and plans to bid for new greenfield plants. The company's earnings are expected to inflect from 2026, driven by improving plant performance and the addition of new renewable energy and thermal capacities. CGSI Research estimates that Malakoff's mini hydro and waste-to-energy projects could contribute RM35mil in annual net profit.

KUALA LUMPUR, July 2, 2025 — Malakoff Corporation Bhd (KL:MALAKOF) has submitted bids to extend power purchase agreements (PPAs) for its existing gas-fired power plants and plans to bid for new greenfield plants, signaling a potential earnings inflection in 2026. The company's earnings are expected to improve due to enhanced plant performance and the addition of new renewable energy and thermal capacities.

According to CGS International Securities Malaysia Sdn Bhd, Malakoff's strong position in securing upcoming Energy Commission tenders is underpinned by its established track record in thermal plant development and operations. The brokerage estimates that plant extensions could generate at least RM40 million in annual net profit from 2026 [1].

Malakoff has submitted bids to extend the PPAs for its GB3, Prai Power, and Segari gas plants through 2029, and plans to participate in bids under Category 2 for new greenfield plants. The company's mini-hydro project and waste-to-energy (WTE) plant are expected to contribute a combined RM35 million in annual net profit [1]. A potential win for a 1.4 gigawatt greenfield gas plant could add at least RM200 million in recurring annual net profit and RM1 billion in equity value, equivalent to 20 sen per share [1].

The company's shares have rebounded from recent lows and are expected to see further upside potential driven by its pipeline of unpriced assets, including the mini-hydro and WTE plants, its stake in E-Idaman, and potential PPA extensions for the GB3, Prai Power, and Segari plants [2]. Analysts are bullish on Malakoff, with seven "buy" calls, five "hold" calls, and no "sell" calls [2].

CGS International reiterated its "Add" recommendation on Malakoff with a target price of RM1.20 per share, based on a conservative assumption of just one joint venture win. The brokerage noted that collectively, these projects provide strong earnings visibility, backed by long-term power purchase agreements and concessions [2].

The Energy Commission recently called for proposals for new gas-fired generation capacity in Peninsular Malaysia through competitive bidding, comprising two categories: an expansion of existing plants and development of new plants. Malakoff is well-positioned to secure wins from the upcoming tender, considering the urgent need to maintain supply stability and reserve margins amid surging power demand [2].

Malakoff's earnings are expected to inflect in 2026, driven by improving plant performance and the addition of new renewable energy and thermal capacities. The company's pipeline of assets and potential new contracts present significant upside potential for investors.

References:
[1] https://www.bernama.com/en/news.php?id=2449161
[2] https://theedgemalaysia.com/node/764019