Malakoff's 1Q16 profit dropped 19% to MYR84m

Blame it on rising costs from maintenance activities and damages.

Maybank Kim Eng reported that 1Q16 results were below expectations primarily on cost escalations mainly relating to maintenance. Nevertheless, with maintenance activities tapering off, and PD Power’s extended PPA kicking in, Malakoff’s earnings outlook should improve in the coming quarters.

Malakoff’s 1Q16 net profit of MYR84m (-19% YoY, -21% QoQ) represents just 15% of ours/consensus full-year forecasts respectively. The miss was mainly due to cost escalations in the quarter arising from 1) higher maintenance activities mainly at Tanjung Bin Power and 2) provision for liquidated damages arising from the slight delay in Tanjung Bin Energy’s commissioning. No dividend was declared this quarter.

"Malakoff has recently appointed Datuk Wira Azhar Abdul Hamid (previous CEO of MRT Corp and MD of Sime Darby Plantations) as its new Group Managing Director. With the top position now filled, the lack of progress on new projects and acquisitions could potentially be reversed in the near future, in our view," Maybank Kim Eng said.