PETALING JAYA: The renewable energy (RE) sector is expected to ride on strong structural themes and positive earnings growth cycle.

       Hong Leong Investment Bank Bhd (HLIB), which maintained its “overweight” call, said key catalysts include contract rollouts, fresh RE quotas and export news flow. The research house has “buy” recommendations on Solarvest Holdings Bhd with a target price of RM1.55 and Samaiden Group Bhd with a target price of RM1.43.

       “Going into 2024, we look forward to Corporate Green Power Programme (CGPP) job flows to lift order books and drive earnings growth. We estimate there could be RM2.7bil to RM3bil worth of contracts.

       “The 800MW CGPP was fully allocated to 32 winning submissions in November.

       “Big winners of solar producer quotas (not adjusted for stake) are Tenaga Nasional Bhd (TNB 90MW), Solarvest Holdings Bhd (90MW), Sunview Group Bhd (60MW) and Samaiden Group Bhd (43.3MW).

       “We expect to see engineering, procurement, construction and commissioning (EPCC) contract flows from CGPP starting in early 2024 as most CGPP projects will be expected to be up and running by end 2025.

       “In this regard, we expect Solarvest to emerge as the biggest winner with its active involvement in 443.4MW of EPCC quotas worth and estimated RM1bil –RM1.1bil (current orderbook: RM289mil),” HLIB Research said.

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       Over the past year, the government has rolled out the National Energy Transition Roadmap (NETR) part one and two consisting of 10 flagship catalytic projects worth more than RM25bil.

       The flagship projects are based on six energy transition levers: energy efficiency, RE, hydrogen, bio-energy, green mobility and carbon capture, utilisation and storage.

       Over the long-term, NETR plans to expand solar capacity by a compound annual growth rate of 14% through to 2050, solidifying a bullish outlook for solar players. Meanwhile allocations for the NEM Rakyat and Nova had been fully taken up translating to an overall take up rate of 94% and expanded quota allocations are expected to be announced imminently translating into more commercial and industrial projects for solar EPCC players.

       In terms of exports, Malaysia aims to set up a renewable energy exchange in 2024, intended to facilitate cross border low carbon electricity exports.

       To do this, the government will be amending the Electricity Supply Act, single buyer carve-out and eventually third party access model.

       The export exchange will be executed through a single buyer mechanism to ensure there is no conflict of interest and the single buyer will be carved out of TNB.

       The exchange will then sell electricity to the highest bidder with most of the export premium to be captured and reinvested into grid upgrades.