KUALA LUMPUR (July 17): The sixth phase of the Large Scale Solar programme (LSS6) is expected to bring in opportunities valued between RM8 billion and RM9 billion for engineering, procurement, construction and commissioning (EPCC) beneficiaries, Maybank Investment said in a note.
The outlook was supported by LSS6 being the first LSS programme to include mandatory integration of battery energy storage systems, which would increase the current solar capacity of 2.5 gigawatts by an additional 1.2 gigawatts, providing additional revenue.
Due for bidding from July to August 2026, the research house expects shortlisted bidders to be announced in the first half of 2027 (1H2027) and contract awards to be given in 2H2027.
“In our view, this should provide a timely replenishment of order book for most EPCC contractors, as LSS5 projects are expected to be completed by end-CY2027,” said Maybank.
The house prefers exposure to EPCC players, as they are set to benefit from the robust wave of contract opportunities from LSS6 and potential project pipeline from the Corporate Renewable Energy Supply Scheme.
Although the house expects bidding to be competitive, it predicts typical pricing to be in line with 8%-12% in equity internal rate of return due to low risks with Tenaga Nasional Bhd (KL:TENAGA) acting as the offtaker.
In light of this, Maybank has chosen Solarvest Holdings Bhd (KL:SLVEST) as its top pick in the 'overweight' renewable energy sector. The research house has maintained its ‘buy’ call on the stock, with a target price of RM4.31 underpinned by the company's dominant 30% market share in solar projects.
Additionally, the research house has assigned ‘buy’ ratings to both Pekat Group Bhd (KL:PEKAT) and BM Greentech Bhd (KL:BMGREEN). It also has target prices of RM2.31 for Pekat and RM2.18 for BM Greentech.
“We believe bidders with proven solar farm track record and land bank located in areas with rising energy demand (i.e. Southern region) will be favoured to optimise generation and energy transmission planning,” the house explained.
While confident in its outlook, Maybank cautions that unexpected policy changes, higher-than-expected raw material price volatility and competitive market risks could endanger company earnings.