KUALA LUMPUR (Dec 22): The renewable energy industry in Malaysia for 2024 will see strong growth on the back of sturdy structural themes for the industry and positive earnings cycle, said Hong Leong Investment Bank (HLIB) Research.

In a sector outlook report on Friday, the research house said it expects the Corporate Green Power Programme (CGPP) to drive earnings growth for solar players, as they stand to secure more engineering, procurement, construction and commissioning (EPCC) contracts from the 800W quota allocated to 32 winners. 

“We expect Solarvest Holdings Bhd ('buy'; target price or TP: RM1.55) to emerge as biggest winner with its active involvement in 443.4MW of EPCC quotas worth an estimated RM1 billion to RM1.1 billion (current order book stands at RM289 million),” HLIB said. 

“We estimate that the CGPP programme in entirety could yield between RM2.7 billion to RM3 billions of EPCC contract flows next year, even after factoring deflationary solar module prices,” HLIB added. 

Besides, the research house also highlighted that the National Energy Transition Roadmap (NETR) will further support the expansion of solar capacity in the country in the long term, as well as the potential for cross-border electricity exports through a renewable energy exchange. 

“For context, Malaysia is currently exploring a second interconnection to Singapore with a capacity of 2GW (first interconnector 1GW). While it is unclear what internal rate of return will be to developers, this will catalyse further RE capacities,” HLIB said.

The research house also has a “buy” recommendation on Samaiden Group Bhd with a TP of RM1.43.