KUALA LUMPUR: Affin Hwang Capital (Affin Hwang) expects advancements in national energy transition initiatives to positively influence sentiment in the renewable energy sector.
The firm said in the short term, the forthcoming Corporate Green Power Programme (CGPP) contract awards are expected to create RM1.4 billion to RM1.6 billion in engineering, procurement, construction and commissioning (EPCC) job opportunities.
"Meanwhile, a proper execution of the third-party access (TPA) in September would encourage further investment in renewable energy assets and potentially re-rate the sector.
"The 2.0 gigawatts (2GW) large-scale solar 5 (LSS5) is in the midst of a request for proposal submission stage, and the programme would provide the industry with additional orderbook visibility until 2026," it added.
The firm said the upcoming June and September quarters will act as transitional periods before the CGPP contracts replenish the industry's orderbook.
"Solarvest Holdings Bhd and Samaiden Group Bhd have mostly completed their LSS4 projects, while two of Sunview Group Bhd's projects are nearing the end of their construction.
"As a result, we expect billings and earnings for the quarter to be either flat or slightly weaker sequentially," it said.
Affin Hwang indicated that the majority of the CGPP progress billings are anticipated to be recognised towards the end of the construction period in 2025.
Additionally, the firm said production cuts in Southeast Asia will not significantly affect local solar photovoltaic EPCC contractors because they mainly source their solar panels from China, where the prices are more economical.
"These cuts are also unlikely to cause a rise in solar panel prices, given the substantial global demand-supply gap and the relatively minor role of the regional facilities in the global supply chain.
"However, the cuts may help prevent further price declines," said the firm.
Affin Hwang classified Malaysia's renewable energy sector as "Overweight" due to expectation that the country's accelerated energy transition will have a positive effect on the local solar photovoltaic industry as a whole.
The firm has selected Solarvest as its primary sector choice because of its prominent position in obtaining substantial utility-scale solar projects and capacity from government initiatives, coupled with its proven track record as a developer in the solar PV industry.