PETALING JAYA: There is more upside to renewable energy (RE) projects, with the spotlight now on the Large-Scale Solar 6 (LSS6) programme following the announcements of RM15bil worth of LSS5+ projects.
The Corporate RE Supply Scheme (CRESS), launched a year ago, and rising data centre tariffs provide further momentum.
Kenanga Research said that given the pipeline of projects, the focus would be on the engineering, procurement, construction and commissioning (EPCC) players who can secure partnerships to access more capital and scale faster, which could then trigger a re-rating of the listed ones.
“Execution will also be one of the key catalysts. Historically, solar EPCC stocks have been news flow-driven, with share prices reacting to new project awards.
“With expectations already priced in, the initial excitement may fade as the market begins to focus on real outcomes,” it said.
“While the EPCC pie continues to expand, rising execution risks, driven by heavier outsourcing and potential panel price swings, could compress margins.
“Meanwhile, Budget 2026 should shed more light on LSS6 and the Solar Accelerated Transition Action Programme (ATAP), including quota allocations and scheme structure,” it said.
Solar ATAP, a rooftop solar scheme for residential users, will be rolled out this December and replaces the Net Energy Metering scheme, which has not accepted new residential applicants since July.
The Solar ATAP scheme complements the Battery Energy Storage System (BESS) scheme that the government has been pushing, as it enables users to store power independently and not rely on the national power grid.
“We also expect the government to push for BESS adoption, making it compulsory for all solar plants from 2026 onwards to ease grid strain, particularly from LSS6,” it said.
Kenanga Research added the government’s introduction of an ultra-high voltage tariff has made CRESS adoption more attractive, and EPCC players can expect more jobs over the medium term.
The research house has maintained an “overweight” call on RE-related stocks, with the top picks being KJTS Group Bhd
and Solarvest Holdings Bhd.
It noted KJTS’s pivot from one-off EPCC projects to cooling-as-a-service, as the company, the only listed domestic energy efficiency player, leverages a new wave of spending into the RM41bil cooling energy market. It has a target price (TP) of RM2.12 for KJTS.
As for Solarvest, it pointed to the company’s strong market position, execution track record, clientele and value proposition of its solar photovoltaic system financing programme, and its strong earnings visibility backed by sizeable outstanding order and tender books, and recurring income from a growing portfolio of solar assets.
It has a TP of RM3.25 for the stock.
