Meanwhile, it is noted that Malakoff’s 90%-owned Tanjung Bin Power Sdn Bhd has experienced several operational issues since beginning its commercial operation in March 2016. But a relief has come in the form of an agreement early Aug 2017 between Tanjung Bin Power and a consortium of three companies and three other Japanese boiler manufacturers to resolve a long-standing dispute related to the operations of its power plant.
The disputes between the parties were the 22 boiler tube failure incidents at the power station consisting of three 700 megawatts coal-fired units owned and operated by Tanjung Bin Power, and the inability of the plant to meet certain required output conditions.
It was seeking RM780mil in December 2015.
Malakoff now says that the parties have agreed to resolve and settle the disputes in accordance with the terms and conditions of the agreement.
This, in turn, would translate into a settlement payment to Tanjung Bin, which would contribute positively to the earnings and net assets of Malakoff for 2017.
The settlement payment could be realised as an exceptional gain, which could in turn, be used for a higher dividend payout.
Nevertheless while valuations appear increasingly attractive, growth prospects of the company remain opaque due in part to execution risks. In addition, dividend yields of the counter no longer prove as attractive, following the downward revision of its earnings estimates for Malakoff.
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