PETALING JAYA: The outlook for Malakoff Bhd looks positive, given its improving earnings profile, potential beneficiary of strong growth in the national renewable energy capacity and decent dividend yields.

       CGS-CIMB Research said it has revised its sum-of-parts target price for Malakoff to 98 sen post-earnings revisions and factoring in the higher risk-free rate to 4.5% against 3.5% previously.

       Malakoff’s first quarter of financial year 2022 (FY22) results, however, came in below expectations, at 17% of CGS-CIMB and 19% of Bloomberg’s consensus full-year forecasts.

       This is due to higher-than-expected costs and lower-than-projected contribution from Tanjung Bin Energy (TBE).

       The research house said it has cut Malakoff’s FY22-FY24 earnings per share estimates by 3% to 13% to reflect the lower contribution from TBE’s outage and higher operating costs.

       “We expect Malakoff’s FY23-FY24 forecast core net profit to grow on steady performance from its power plants due to expected lower unplanned outages, strong profit from Alam Flora due to business expansion and potential revision of tariffs and lower finance cost due to a lower gearing level,” it added.

       However, CGS-CIMB projected a weaker FY22 core earnings to reflect the impact of the one-off Cukai Makmur.

       On dividends, the research house said Malakoff has been paying out an average of over 90% of its earnings as dividends since 2013, with about 100% dividend payouts for 2017-2019 and about 87% for FY20.

       The group is still committed to maintaining its dividend policy of paying out a minimum 70% of net profit to shareholders, it added.