KUALA LUMPUR, Aug 29 — Malakoff Corporation Bhd’s share price slid in the early session today after it reported weaker financial performance for the second quarter ended June 30, 2023 (2Q 2023).

At 10.58pm, the company’s shares decreased 4.5 sen to 59.5 sen per unit, with 7.84 million shares traded.

The energy generation and environmental solutions company reported a net loss of RM318.73 million in 2Q 2023 compared to a net profit of RM119.15 million a year ago, impacted by fuel margin.

However, during the quarter under review, Malakoff’s revenue rose to RM2.36 billion from RM2.32 billion in 2Q 2022, primarily due to higher energy payment and capacity income recorded from its unit, Tanjung Bin Energy, as well as higher energy payment recorded from Segari Energy Ventures Sdn Bhd.

In a note, Maybank Investment Bank Bhd said Malakoff’s 2Q 2023 results were sharply below consensus expectations.

“The loss magnitude was significant, and we do not rule out the possibility of Malakoff being loss-making in 2023.

“Nonetheless, we maintain a ‘hold’ call with an unchanged target price (TP) of RM0.60, pending updates,” it said.

Meanwhile, in a separate note, Public Investment Bank Bhd said Malakoff’s financial results revealed another negative surprise.

“While coal prices have stabilised, we anticipate that the negative fuel margin would be prolonged until 4Q 2023 due to timing mismatches between the moving average price of coal stock against applicable coal price.

“On this note, we forecast a net loss of RM612.5 million in 2023 for Malakoff, and cut 2024/2025 forecast by 9.0 per cent/6.6 per cent,” it said, downgrading its call on the group to ’neutral’, with a lower TP of RM0.70.

At the same time, Kenanga Investment Bank Bhd also projected a net loss of RM334.2 million in 2023 for the group, to account for a RM800 million negative fuel margin assumption from RM80 million previously.

It had also reduced Malakoff’s 2024 estimated earnings by 10 per cent, cut the TP for its shares by 24 per cent to RM0.62, and downgraded its call on the group to ‘market perform’.

“While we like Malakoff for its earnings stability underpinned by independent power producers and concessions, there is room for improvement in its risk management to reduce or even eliminate the unnecessary earnings volatility such as unplanned outage as well as fuel margin fluctuation,” it said. — Bernama