KUALA LUMPUR, June 5 (Bernama) -- Bursa Malaysia closed higher, with the benchmark index rising 0.60 per cent as bargain-hunting persisted following the recent sell-off, despite weaker performances across regional markets. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) gained 10.17 points to 1,693.43 from Thursday's close of 1,683.26. The benchmark index opened 3.19 points higher at 1,686.45 and traded between 1,684.36 and 1,698.53 during the trading session. However, broader market sentiment remained negative, with losers outnumbering gainers 666 to 477. A total of 574 counters were unchanged, 958 untraded and 12 suspended. Turnover fell to 3.41 billion units worth RM3.04 billion from 3.47 billion units worth RM3.58 billion on Thursday.
Analysts Optimistic on Corporate Renewable Energy Supply Scheme, RE Sector Seen as Primary Beneficiary
Investment analysts are optimistic about the Corporate Renewable Energy Supply Scheme (CRESS), seeing the renewable energy (RE) engineering, procurement, construction, and commissioning (EPCC) sub-sector as the immediate beneficiary of recent RE initiatives.
Key Insights:
Analyst Outlook:
- MIDF Research maintains a "neutral" stance on the power utilities sector due to stretched valuations but views CRESS as a pivotal step towards energy market liberalization in Malaysia with grid third-party access.
- The initiative is expected to boost corporate power purchase agreements (PPAs) and increase RE penetration.
Top Beneficiaries:
- Samaiden Group Bhd (KL): Target price (TP) of RM1.57. Poised to benefit from increased demand in RE EPCC, supported by a strong RM354 million order book.
- Sunview Group Bhd (KL): Maintained "buy" call with an unchanged TP of 88 sen, backed by a robust RM262.8 million order book, including a new RM51.9 million Corporate Green Power Programme (CGPP) EPCC project. Expected to secure an additional RM150 million in contracts and has significant projects in Uzbekistan and Bulgaria.
Sector Leaders:
- RHB Research maintains an "overweight" call on utilities giants, highlighting Tenaga Nasional Bhd (TNB) (KL) with a TP of RM16.10, YTL Power International Bhd (KL) with a TP of RM6.68, and Samaiden with a TP of RM1.57 as top picks.
- The CRESS initiative aligns with government targets to increase RE capacity from 26% (10.6 gigawatts) to 40% by 2035 and 70% by 2050.
CRESS Impact:
- CRESS allows eligible RE generators and corporate firms to arrange green electricity supply under agreed terms through the existing supply system.
- Generators with third-party access can supply renewable electricity to corporate users via TNB’s grid network by participating in the New Enhanced Dispatch Agreement (Neda) market.
TNB Transmission and Distribution:
- The near-term impact on TNB’s transmission and distribution (T&D) business is expected to be neutral, falling under regulated earnings.
- A stronger ramp-up in domestic RE input could lead to higher capex spending in T&D assets, widening TNB’s regulated earnings base in the long run.
Complementary Green Energy Programs:
- CRESS adds to other government-facilitated green energy programs, including net energy metering (NEM) and self-consumption (Selco) for on-site solar panel installations by residential and non-residential consumers.
- Consumers can procure green energy certificates via the Malaysia Green Attribute Trading System (mGATS) or acquire green electricity quotas from the grid by paying the additional Green Electricity Tariff (GET).
The Corporate Renewable Energy Supply Scheme is anticipated to significantly bolster the RE sector in Malaysia, providing substantial opportunities for companies involved in renewable energy projects and supporting the country's ambitious RE capacity targets.
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