This article first appeared in The Edge Financial Daily on May 24, 2017

KUALA LUMPUR: Malakoff Corp Bhd’s net profit rose 17.5% to RM98.79 million or 1.98 sen a share for the first quarter ended March 31, 2017 (1QFY17), from RM84.1 million or 1.68 sen a share a year ago, on a higher fuel margin and higher contribution from its associates.

However, the stronger profit performance was offset by additional depreciation due to a change in estimates of residual values of gas-fired power plants and higher maintenance costs, Malakoff said.

Quarterly revenue also increased 32.5% to RM1.78 billion in 1QFY17, from RM1.34 billion in 1QFY16.

In a filing with Bursa Malaysia yesterday, Malakoff attributed the improved quarterly revenue to the revenue contribution by Tanjung Bin Energy Sdn Bhd for three whole months of the current quarter under review, compared with only 10 days of revenue contribution in 1QFY16, following the commencement of Tanjung Bin Energy’s operation on March 21, 2016.

On prospects for the rest of the year, Malakoff warned that the results for FY17 will be affected by the expiry of its existing Segari Energy Ventures Sdn Bhd (SEV) power purchase agreement (PPA) next month.

“The new SEV PPA, which will take effect upon expiration of the existing [one], stipulates lower levelised tariffs compared with the existing agreement,” it noted.

“Notwithstanding this, the group is continuing with its strategic initiatives to secure growth opportunities in the power sector, as well as to broaden its earnings base in complementary business sectors for the future.

“In addition, the group is focusing on enhancing efficiencies throughout its operations, and hence expects the results to remain positive for FY17,” Malakoff added.