PETALING JAYA: Kinergy Advancement Bhd
(KAB) stands out as a compelling renewable energy (RE) player because of its unique integrated business model, expanding recurring income base and multiple long-term growth catalysts that remain largely unpriced by the market, according to Apex Research.
Initiating coverage on the stock, the research house said KAB is undergoing a quality-of-earnings re-rating as its growing zero-capital expenditure (capex) recurring income portfolio provides a more sustainable earnings base than its traditional engineering business.
It added that the market has yet to fully reflect the value of the group’s Perbadanan Kemajuan Negeri Perak’s RE pipeline, Permodalan Kedah Bhd’s projects and the proposed Perlis combined-cycle gas turbine power plant, all of which offer “material unmodelled upside”.
Apex Research initiated its coverage with a “buy” recommendation and a target price (TP) of 67 sen, representing a 71.8% upside from KAB’s current share price of 39 sen.
The TP is based on 22.7 times financial year 2028 (FY28) earnings, in line with the sector average, despite KAB’s stronger projected earnings growth.
The research house believes KAB’s biggest competitive advantage lies in being Malaysia’s only listed integrated energy company offering RE, clean energy, energy efficiency and engineering services under one roof.
This enables the group to undertake end-to-end self-consumption projects without relying heavily on subcontractors, resulting in stronger margins and higher customer retention.
A key pillar of Apex Research’s bullish view is KAB’s zero-capex business model, under which the group finances and owns energy assets while customers pay only for the electricity generated.
This allows KAB to generate recurring concession-based income alongside operations and maintenance fees, reducing earnings volatility compared with conventional engineering contractors.
The research house believes investors have yet to fully appreciate the value of this recurring income stream.
Beyond RE, Apex Research sees engineering services emerging as a second growth engine as Malaysia attracts more hyperscale data centre investments.
KAB’s established mechanical and electrical engineering expertise positions it to benefit from rising demand for power infrastructure and cooling systems.
The research house projects a 24.8% compound annual growth rate in core net profit between FY26 and FY28, supported by progress billing from its RM1bil order book, continued contract wins under the National Energy Transition Roadmap, and the expansion of its recurring income portfolio.
Revenue is forecast to rise from RM478mil in FY25 to RM650mil by FY28, while core net profit is expected to increase from RM28mil to RM64mil.
