KUALA LUMPUR: RHB Research views the accelerating environmental, social and governance (ESG) momentum and increasing adoption of green energy will continue driving Samaiden Group and Solarvest Holding's growth prospects, which are two of only four listed pure-play solar engineering, procurement, construction and commissioning (EPCC) players.
With surging demand, the research firm viewed further catalysts stemming from the recent tariff hike and decreasing cost pressure from panel prices and material costs.
"Earnings should also scale to new highs, backed by robust orderbook on hand and contribution from own green energy plants," it said.
It said implementing a Voluntary Carbon Market (VCM) will drive companies to engage in decarbonisation projects and green investments such as solar adoption, benefitting both solar players.
"To achieve Malaysia's target of net zero greenhouse gas (GHG) emissions by 2050, Bursa Malaysia launched the Bursa Carbon Exchange (BCX) at the end of last year.
"The exchange will facilitate corporations in trading voluntary carbon credits.
"An auction, scheduled in March, will be conducted for first trades to assist with price discovery for the new standardised carbon credit products listed on the BCX."
It added that the Corporate Green Power Programme (CGPP) applications opened on November 7, 2022, and closed on February 6, 2023, introducing a 600 megawatts (MW) quota.
"Assuming a contract value of RM2.3 million per MW, the total worth of solar projects under CGPP is RM1.4 billion, which will help replenish both companies' orderbooks.
"Despite the contracts expected to be announced within three months of the closing date, we expect contract rollouts in the second half of 2023 (2H23)," it said.
It also noted the imposition of a 20 sen per kilowatt hour (kWh) Imbalance Cost Pass-Through (ICPT) mechanism surcharge from the previous 3.7 sen per kWh on medium voltage (MV) and high voltage (HV) commercial and industrial (C&I) users 1H23 will encourage companies to switch to efficient energy sources.
This should benefit Samaiden and Solarvest, raising C&I orders.
It added key components of solar module prices, including raw material prices, shipping costs, module technologies, and foreign exchange rates that have risen over 2021-2022.
However, by the tail end of 2022, these costs began to decrease, thus lowering the price of solar panels.
"Against this backdrop, we believe solar demand will pick up.
"Furthermore, delayed large-scale solar projects should resume with better margins, contributing to both players' bottomline," it said.
The research firm upgraded the solar power sector to "Overweight".
https://www.nst.com.my/business/2023/02/877163/growing-adoption-green-energy-drive-samaiden-solarvests-growth
