RM2.40 by UOB KayHian
About RM2.30 My friend said from Affin, not sure.
RM2.10 by Inter Pacific Research Sdn Bhd
RM2.09 by TA Securities
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Fair value at RM2.18 a share for Malakoff, says PublicInvest Research
Posted on 6 May 2015 - 05:37am
sunbiz@thesundaily.com
PETALING JAYA: PublicInvest Research has pegged a fair value of RM2.18 for Malakoff Corporation Bhd which is 21.1% above the retail offer price of RM1.80 for its upcoming initial public offering (IPO).
The fair value, using a discounted cash flow (DCF) valuation, translates to financial year 2016 (FY16) price-to-earnings of 15.3 times and enterprise multiple of 7.5 times.
"Key catalysts would be securing new projects for power and water generation plants, renewal or extension for its expiring power purchase agreements (PPAs) and additional capacity in renewable energy," analyst Syarifah Hidayatul Akmal said.
In her report yesterday, Syarifah said key assumptions for the DCF valuation included a discount rate using weighted average cost of capital (WACC) of 7.6%; consistent and continuous capacity payments from the group's Segari Energy Ventures (SEV), GB3, Prai and Tanjung Bin power plants until the expiry of PPA.
She also took into account Tanjung Bin Energy power plant commencing operations in March 2016 and starting to receive capacity payments from then; all power plants to run smoothly without unplanned outages; PD power plant PPA expiring in Jan 2016 and lower capacity payments from extended SEV PPA upon expiry of current PPA.
Syarifah expects capacity payments from Tanjung Bin Energy power plant to boost the group's net profit by 46.6% and 29% for FY16 and FY17 with better net profit margin of 9.9% and 12.2% in FY16 and FY17 respectively from the current 6.1%.
"However, we expect the group's earnings to decline by 22.9% in FY18 due to the full-year effect from the lower capacity payments arising from the revised capacity rate financial (CRF) of the extended PPA.
She also noted that Malakoff's SEV power plant initial PPA, which was to have expired in June 2017, was extended for a 10-year period until 2027 in 2013 under the Track 2 tender for first generation IPPs.
"Management has confirmed there will be a huge step- down in capacity payments and we assume the extended version will be approximately 20% from the original PPA.
"As the SEV power plant infrastructure cost has been paid off upon expiry of original PPAs, the extension at lower rate is still considered a bonus to the Group," she said.
Syarifah also pointed out that based on the assumption of a 70% payout ratio as per its dividend policy, Malafoff's dividend yield is estimated to be 3.1%, 4.6% and 5.9% for FY15, FY16 and FY17 respectively.
"However, as we estimate lower earnings in FY18, the corresponding decline in dividend yield for the year is still expected to be an attractive 4.5%, approximately.
"We like Malakoff for its attractive dividend yield of above 4.5% on an average basis, higher than other power players such as Tenega Nasional Bhd and YTL Power which offer lower yields in the range of 2.3%- 3.0%.
However, she noted that , Malafoff's revenue and earnings are highly dependent on the capacity payments, therefore any operational issues at any of its power plants which could lead to unplanned outages may adversely affect its future cash flows and its valuation.
"It is also crucial for the group to replenish its expiring PPAs with extension or new PPAs to sustain its profitability," she said.
Malakoff is the largest independent power producer (IPP) in Malaysia and Southeast Asia in terms of total generation capacity.
Internationally, the group has presence in Saudi Arabia, Algeria, Bahrain and Oman for power generation and water production, and in Australia for renewable energy.
The group has an effective power generation capacity of 6,036MW (including 210MW renewable energy) and effective water production capacity of 358,850 cubic metres a day.
Malakoff's IPO consists of institutional offering up to 1.28 billion shares and retail offering of 242.5 million shares.
The IPO of up to 1.52 billion shares in Malakoff comprises a public issue of 1 billion new shares and an offer for sale of up to 521.74 million existing shares.
The IPO represents about 30.4% of the group's enlarged issued and paid-up capital of 5 billion shares, with institutional and retail offerings representing about 25.6% and 4.8% of the enlarged issued and paid-up share capital respectively. The final retail and institutional prices have been fixed at RM1.80 per share.
Malakoff will use the entire IPO proceeds of RM1.80 billion to fully redeem its RM1.8 billion Junior Sukuk Musharakah which was used to partly finance the privatisation of Malakoff in 2007.
A PEGGY Method of Stock Market
