This article first appeared in The Edge Financial Daily on August 24, 2018

KUALA LUMPUR: Malakoff Corp Bhd made only half as much in the second quarter financial year ended June 30, 2018 (2QFY18), owing to lower contribution from its assets, primarily Segari Energy Ventures Sdn Bhd, following a tariff reduction under an extended power purchase agreement.

Lower fuel margins recorded at Tanjung Bin Power Sdn Bhd and Tanjung Bin Energy Sdn Bhd coal plants also contributed to the 49% drop in net profit to RM52.55 million from RM103.27 million last year, despite the 12% rise in revenue to RM1.94 billion from RM1.73 billion.

The group declared an interim dividend of 2.1 sen per share for the financial year ending Dec 31, 2018, payable on Oct 11.

For the cumulative six months, Malakoff’s net profit declined 48% to RM105.45 million from RM202.05 million a year ago, though revenue rose a marginal 1% to RM3.55 billion from RM3.52 billion.

Looking ahead, the group remains positive about the overall 2018 outlook, given strong electricity demand from the industrial and domestic sectors and enhanced operational efficiencies.

“The group will continue to focus on improving the performance and reliability of its assets to minimise disruption,” said Malakoff, adding the group’s existing overseas investments are expected to yield positive returns in the coming quarters.

It will also continue to explore potential opportunities in both greenfield and brownfield, in high-growth regions, as well as in renewable energy projects overseas.

Separately, Malakoff said its wholly-owned subsidiary Tuah Utama Sdn Bhd plans to sell its entire stake or 13.6 million shares in Lekir Bulk Terminal Sdn Bhd (LBTSB), equivalent to a 20% equity interest, for RM90 million.

Malakoff, which received a letter of offer from Tenaga Nasional Bhd’s wholly-owned unit Integrax Bhd on Monday, said it had accepted the offer yesterday, and that it will make the necessary announcement upon execution of the shares sale agreement.

Presently, Integrax, via its wholly-owned Pelabuhan Lumut Sdn Bhd, holds 54.4 million shares or an 80% shareholding in LBTSB.

The disposal will net Malakoff a gain of RM55.3 million, which it plans to use to fund future investments and working capital requirements.

The proposed disposal is part of its effort to rationalise its investments to focus on higher-growth areas. It also unlocks the value of its investment in LBTSB, the group’s non-core business, at a reasonable price, said Malakoff.

LBTSB is principally involved in the development, ownership, operation and management of Lekir Bulk Terminal, a dry bulk terminal in Perak.

Shares of Malakoff closed 4.5 sen or 4.57% higher at RM1.03 yesterday, bringing its market capitalisation to RM5.06 billion.