KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB Research) has maintained its 'Overweight' outlook on the renewable energy sector for 2025.
The firm expressed confidence in key growth drivers, including the two-gigawatt (GW) Large Scale Solar 5 (LSS5) programme, the Corporate Renewable Energy Subscription (CRESS) scheme, the 190-megawatt (MW) Feed-in Tariff (FiT) 2.0 initiative, and various floating solar projects.
HLIB also commended the Energy Transition and Water Transformation (Petra) Ministry for its strong performance in 2024, highlighting its success in advancing ambitious National Energy Transition Roadmap (NETR) targets with well-defined quotas and supporting programmes.
"With a plethora of projects to work with, we anticipate a shorter order book depletion cycle this time amid projected fresh record high earnings," it said in a note.
HLIB Research has forecasted new record high earnings for Solarvest Holdings Bhd and Samaiden Group Bhd with projected annual growth of 26 per cent and 24 per cent respectively, on the back of a strong orderbook replenishment cycle seen in calendar year 2024 (CY24).
It also noted that Solarvest has posted its highest-ever earnings in the past two fiscal years.
"We reckon the financial year 2025 (FY25) will be no different as the second half (2H) plays catchup driven by corporate green power programme (CGPP) projects.
"In general, our observation of estimated engineering, procurement, construction, and commissioning (EPCC) costs per megawatt peak (MWp) (RM2.2 million - RM2.7 million) has been healthy, putting to bed our earlier concerns of full pass-through of lower panel prices—panel prices have declined by 80 per cent since 2022.
"We are expecting higher EPCC margins from the CGPP projects to be also supplemented by good margins at the commercial & industrial/residential (C&I/residential) side," it said.
HLIB Research said that in CY24, solar EPCC players greatly benefitted from the rollout of 800 MW of CGPP EPCC contracts, valued between RM2 billion and RM3 billion.
It said that Solarvest and Samaiden achieved record-high order books throughout the year, fuelled by the growth of large-scale EPCC contracts.
Solarvest has an unbilled orderbook of RM961 million (32 per cent higher than the previous high), while Samaiden now sits on an unbilled figure of RM521 million (40 per cent higher than the record).
"Not to mention, the strong take-up momentum coupled with consistent quota upsizing seen for the Net Energy Metering 3.0 (NEM 3.0) programme led to what we observe to be higher than usual C&I/residential flows into companies' order books," it added.
HLIB Research noted that Petra has significantly increased quotas, allocating 150 MW for the NEM Rakyat programme and 600 MW for the NOVA programme.
"In our view, key factors to an unusually strong take-up momentum seen in particular for NEM Rakyat can be attributed to the implementation of targeted electricity subsidies starting July 2023, a cash rebate scheme of RM1,000 kilowatt alternating current (kWac) up to a max RM4,000 scheme provided by the government (SOLARIS), and, to a lesser extent, accelerating EV sales," it said