| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A recent research report by TA SECURITIES highlights the robust outlook for a prominent solar energy player, reaffirming a “BUY” recommendation. The investment bank has set a target price of RM0.25, suggesting a significant 25.0% upside from its last traded price of RM0.20, driven by a combination of strong operational performance, strategic cost efficiencies, and a burgeoning project pipeline.
Performance Review
The company recently demonstrated improved financial performance, particularly in its second quarter of FY26, where engineering, procurement, construction, and commissioning (EPCC) margins for Large Scale Solar (LSS5) projects exceeded prior expectations. This positive development is attributed to effective project design optimisation and strategic location proximity. The strong operational footing is further supported by a projected 3-year earnings compound annual growth rate (CAGR) of 27% through FY28F, signalling sustained profitability.
Strategic Efficiencies and Future Growth
A key factor underpinning the positive outlook is the company’s proactive approach to managing input costs. Solar module requirements for ongoing projects were largely secured a year ago when prices were at their lowest, with a substantial portion of these shipments expected by April 2026. This strategic procurement has enabled better EPCC margins.
The order book remains strong, with an outstanding RM601 million as of December 2025. The company is actively pursuing a RM1 billion order book target for CY26, anticipating new wins from upcoming LSS5+ EPCC awards, which involve approximately 2GW of awarded capacity. The upcoming LSS6 auction is also expected to launch by the end of the first quarter of CY26, potentially expanding EPCC value through mandated Battery Energy Storage System (BESS) requirements. The current EPCC tender book stands at RM2 billion.
Furthermore, maiden earnings contributions are expected soon from two Corporate Green Power Programme (CGPP) assets nearing completion, projected to add approximately RM2.3 million annually. Two large-scale LSS5 and LSS5+ plants are also slated to come online by CY26 and CY27, contributing an estimated RM4.4 million annually to recurring income.
Challenges and Risks
Despite the optimistic outlook, the report acknowledges potential challenges. Rising solar module prices could temper LSS5+ margins, leading to a slight downward revision of the FY28F net profit by 5.4%. The slow pace of LSS5+ EPCC awards in the first half of CY26 is also a point of concern. Key risks include a sharp increase in raw material costs and potential delays in project implementation.
Conclusion
Overall, the company is well-positioned to capitalise on the upcycle in renewable energy plant development. Its solid order book, robust net cash position, and strong pipeline of renewable energy assets are expected to drive significant recurring income and earnings growth. TA SECURITIES reiterates its “BUY” call, affirming confidence in the company’s long-term prospects.
