Solarvest, Samaiden tipped for first Cress project wins within three months

KUALA LUMPUR: Solarvest Holdings Bhd and Samaiden Group Bhd could secure their first Corporate Renewable Energy Supply Scheme (Cress) projects within the next three months, Hong Leong Investment Bank Bhd (HLIB) said.

The firm expects Cress awards and deal announcements to pick up in the fourth quarter of 2026 and first quarter of 2027 following the government's introduction of the Cress Acceleration Package last Friday.

HLIB analyst David Ng said Cress projects had previously been slow to progress as renewable energy developers and green consumers took time to negotiate commercially viable terms.

However, the new package requires projects seeking the special System Access Charge (SAC) rate to achieve commercial operation by Dec 31, 2028.

"We expect developers and data centre offtakers to accelerate negotiations and lock in projects," Ng said in a note on Monday.

"This should drive stronger Cress news flow and deal announcements in the fourth quarter of 2026 and first quarter of 2027, in our view."

With solar projects typically requiring about 18 to 24 months to build and commission, Ng said the 2028 deadline leaves a relatively tight window for developers to secure contracts, reach financial close and begin construction.

"Hence, we expect Solarvest Holdings Bhd and Samaiden Group Bhd to secure their first Cress project in the next three months," Ng said.

The government last week introduced a SAC rate of 14 sen per kilowatt-hour for firm supply under the acceleration package, alongside a mandatory 10-year contractual period between renewable energy developers and green consumers.

HLIB said Cress could also offer developers better returns than projects awarded under the Large Scale Solar (LSS) programme.

Unlike LSS, where competitive bidding tends to push tariffs and project returns lower, Cress allows developers to negotiate tariffs directly with corporate customers.

HLIB cited Singapore-headquartered global data centre operator DayOne's Cress project as an example of the potentially higher returns.

It said the project could generate an internal rate of return (IRR) of about 12 per cent, compared with its estimated six to eight per cent for previous LSS projects.

"Our back-of-the-envelope analysis suggests that Cress projects could generally generate about nine to 11 per cent IRRs, depending on power purchase agreement tenure, contracted tariff, land and financing costs," it said.

"This should improve developers' project economics and provide a stronger incentive to prioritise Cress opportunities."

HLIB raised Solarvest's earnings forecasts for financial year 2027 (FY27), FY28 and FY29 by 35.1 per cent, 33.2 per cent and 33 per cent, respectively, mainly to reflect higher order book and margin assumptions.

It maintained its "Buy" call and raised the target price to RM4.85 from RM3.59 previously.

Solarvest shares last closed at RM3.33. At the time of writing, the stock was up 10.81 per cent or 36 sen at RM3.69.

Apart from an expected first Cress contract within three months, HLIB sees Solarvest's collaboration with Brookfield as providing access to larger projects, development capabilities and capital.

It also highlighted Solarvest's access to land in key data centre clusters in Johor as potentially strengthening its ability to participate in Cress projects.

For Samaiden, HLIB raised its FY27 and FY28 earnings forecasts by 42 per cent and 48 per cent, respectively, mainly on higher order book assumptions.

It reinstated its "Buy" call with a higher target price of RM3.13 from RM2.35.

Samaiden last closed at RM1.95. At the time of writing, the shares were up 15.38 per cent or 30 sen at RM2.25.

HLIB said Samaiden has an RM3.5 billion tender book, about 70 per cent of which comprises Cress projects, providing stronger visibility for order book replenishment over the next two years.

The firm maintained its "Overweight" rating on the renewable energy sector, citing the continued expansion of Malaysia's data centre industry and expectations that the Cress Acceleration Package will speed up project development.