Renewable Energy Sector: Steady Growth with Strong Prospects

The renewable energy (RE) sector posted a broadly in-line 4QCY24 performance, with two out of three key players—SLVEST and SAMAIDEN—meeting expectations, while PEKAT exceeded forecasts due to cost efficiencies. Sector-wide core earnings surged 88.5% quarter-on-quarter (QoQ) and 83.5% year-on-year (YoY), primarily driven by lower solar module costs and strong project billings.

Renewable Energy Sector

Looking ahead, the sector is poised for continued growth, supported by key government initiatives such as the LSS5 program and CGPP projects, which will keep solar engineering, procurement, construction, and commissioning (EPCC) contractors busy until at least 2027. The estimated RM5.8 billion orderbook replenishment further strengthens the outlook. Additional policies, including the NEM 450MW quota and LSS6 rollout, will continue to drive long-term growth.

Overweight

On valuations, analysts maintain an OVERWEIGHT stance on the sector, with BUY ratings for SLVEST (TP: RM2.00) and SAMAIDEN (TP: RM1.71), while PEKAT has been upgraded to BUY with a revised target price of RM1.43. Given the strong policy push and sustained demand for solar solutions, the sector remains well-positioned for robust earnings expansion in the coming years.

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