PETALING JAYA: Elridge Energy Holdings Bhd’s memorandum of understanding with Berkana Power Company Ltd for the supply of about 100,000 tonnes per annum of palm kernel shells (PKS) is seen as a constructive development.
It marked the company’s entry into a new customer relationship and strengthening its presence in the Thailand biomass market.
Eldrige is primarily involved in the manufacturing and trading of biomass fuel products.
In a report, Apex Securities said while the arrangement is non-binding and structured over one year, it establishes a commercial framework for purchase order issuance and provides optionality for repeat or longer-tenure offtake, in line with the group’s strategy to raise its long-term sales mix toward circa 60% (from an estimated about 40% currently).
Assuming conversion into longer-term offtake, long-term contracted volumes would rise to around 34% of current production capacity, it said.
Apex Securities said it remained positive on the group’s outlook, supported by structurally resilient PKS demand, ongoing capacity expansion of circa 17% per annum by year-end, and continued progress in offtake diversification.
It said Japan remained the group’s primary demand base, supported by an estimated 600 operating biomass power plants, implying sustained fuel demand, with risks skewed toward price re-basing rather than volume displacement.
Beyond Japan, Eldridge continues to expand its export footprint, with Thailand representing a key incremental market, alongside growing exposure to South Korea, China and Indonesia, it added.
Apex Securities has maintained its “hold” call on the company with an unchanged target price of 97 sen.
At last look, the stock was at RM1 apiece.
