Phillip Capital Research said the adoption of the Corporate Renewable Energy Supply Scheme is likely to gain momentum with the finalisation of the LSS5 projects.
PETALING JAYA: Energy transition remains an attractive investment space with significant opportunities and contract flows that will boost sentiment in the renewable-energy (RE) sector.
Phillip Capital Research stated in a report that the upcoming contract award announcements for the fifth phase of the government’s Large Scale Solar (LSS5) initiative offer engineering, procurement, construction and commissioning (EPCC) jobs worth some RM7bil.
The research house added the adoption of the Corporate Renewable Energy Supply Scheme (CRESS) is likely to gain momentum with the finalisation of the LSS5 projects.
“Developers with identified land for solar assets, whose bids for LSS5 are unsuccessful, may pivot to CRESS as an alternative for project development, potentially generating another round of EPCC contract opportunities for the sector,” the research house said in its Malaysia Strategy report.
It added the recent expansion of rooftop solar capacity is likely to drive further contract opportunities for solar EPCC companies such as Pekat Group Bhd
, BM Greentech Bhd and Solarvest Holdings Bhd.
“We project the sector’s aggregate earnings to grow by 63% in 2025, driven by robust order books bolstered by ongoing Corporate Green Power Programme and Net Energy Metering (NEM 3.0) projects,” Phillip Capital Research said.
Its top picks for the RE sector are Pekat with a “buy” rating and a target price of RM1.15 and BM Greentech with a “buy” rating and a target price of RM2.65.
“We favour Pekat’s substantial exposure to high-growth sectors, including solar energy and data centres. BM Greentech stands out for its comprehensive energy-solution offerings in bio-energy, water and solar energy, supported by initiatives under the National Energy Transition Roadmap,” the research house said.
Pekat is expected to deliver high earnings growth of 114%, underpinned by its recent acquisition of 60% interest in EPE Switchgear (M) Sdn Bhd.
The research house also has a “buy” rating on Solarvest at a target price of RM2 as it expects the company to be one of the beneficiaries of Malaysia’s solar RE initiatives, supported by its solid market share and proven execution track record.
