KUALA LUMPUR (May 21): Analysts have raised their full year earnings forecasts for the financial year 2020 (FY20) for Malakoff Corp Bhd after imputing better prospects on the group’s newly acquired subsidiary, Alam Flora Sdn Bhd.

Malakoff posted a higher net profit for the first quarter ended March 31, 2020, a 33% rise to RM89.18 million, boosted by the inclusion of income from Alam Flora as well as higher contribution from associate companies. This was despite a lower revenue of RM1.77 billion — down 11.63% — as a result of lower energy payments at its Tanjung Bin Power Sdn Bhd and Tanjung Bin Energy Sdn Bhd facilities.

Analysts said the 1QFY20 earnings came in above expectations and have upgraded their earnings forecast to factor in the inclusion of Alam Flora, as well as absence of losses from its 40%-owned Kapar Energy Ventures Sdn Bhd (KEV) after the associate asset was written down by RM433.3 million to zero value in 4QFY19.

Kenanga Research has raised its call on Malakoff to “outperform” with a higher target price of RM1.02, after upgrading its FY20 core net profit forecast by 31%.

“With the kitchen sinking exercise on KEV in 4QFY19, forward earnings are expected to be stable in the absence of KEV losses. Meanwhile, the current Movement Control Order (MCO)-led slowdown should have immaterial impact on Malakoff as it is an essential service provider,” Kenanga added.

Affin Hwang Capital has also upgraded its call to a “buy” with an unchanged target price of 95 sen. It has upgraded its earnings per share forecast by 4% to 6% for FY20 to FY22.

Meanwhile, RHB Research is expecting Malakoff to post a 3% to 14% increase in earnings for FY20 to FY22, underpinned by better plant reliability and stable contributions from Alam Flora while paving the way for renewable energy ventures in the longer run.

RHB is keeping its “buy” call on the stock with a higher target price of RM1.09.

“Further growth can be achieved if Malakoff is able to secure any international greenfield or brownfield power generation or water projects via its collaboration with JPower, one of the largest power companies in Japan,” RHB said.