PETALING JAYA: In anticipation of the growth potential seen for Kumpulan Powernet Bhd (KPower) in financial year 2021 and next, AmInvestment Bank Research has reiterated its “buy” recommendation on the stock.
It has a fair value of RM5.97 on the stock based on 15 times financial year 2022 (FY22) earnings per share, which is at a discount to the average forward 20 times price-earnings of leading renewable energy (RE) players globally.
The research firm said the discount was because KPower is a relatively new player in the RE space with relatively small market value.
“On the flip side, from a relatively low base, the growth potential of KPower’s earnings is tremendous at more than 100% and more than 40% in FY21 and FY22, respectively, based on our projections, ” it added.
It was upbeat on the group following an analyst briefing on expectations that the winners of the one gigawatt fourth cycle of the large-scale solar (LSS) project would likely be announced this year.
KPower has participated in the tender for 50MW, which could involve asset ownership, in addition to engineering, procurement, construction and commissioning (EPCC) packages.
“We believe KPower is giving Samaiden, Solarvest, Cypark Resources and Megafirst Corp a run for their money, a handful of listed companies that have proven capability and track record in carrying out EPCC solar projects.
“We gather there is a possibility that new entrants could also emerge winners for the LSS4 work packages. If this happens, KPower may reach out to them to set up joint ventures to carry out the work packages, ” said AmInvestment.
It added that KPower could be targeting another 50–100MW under this joint-venture model.
The group maintained its target job wins at RM2bil in FY21 versus AmInvestment’s more conservative assumption of RM1.4bil annually in FY21-FY23.