PublicInvest ‘neutral’ on Reservoir Link
Reservoir Link Energy Bhd is expected to secure more work upon the execution of the Corporate Green Power Programme (CGPP), according to Public Investment Bank Bhd (PublicInvest).
Reservoir Link announced that its 51 per cent-owned subsidiary, Founder Energy, has secured sub-contracting work for engineering, procurement, construction, and commissioning (EPCC) from JS Solar SB for a 50megawatt solar farm in Kedah.
The estimated value of the
works is RM22 million, and it will increase its order book for the renewable energy (RE) segment to RM44.7 million.
The research house said the contract provides a lifeline for the company’s RE segment, while awaiting execution of the CGPP to replenish its order book in the second half of this year.
It said this is because the power producers need to achieve the targeted commercial operation date for CGPP by December 2025, as guided by authorities earlier.
“We believe 12 to 18 months provides sufficient time for EPCC contractors to meet the target.”
However, PublicInvest said the current slowdown in the RE segment is mitigated by its oil and gas segment, which has RM237.2 million in its existing order book.
The firm estimates that the contribution of the subcontractor works to its bottom line is about five per cent of the financial year 2025.
“This is based on our net profit margin for the segment, which is about three per cent and after excluding a 49 per cent minority interest in Founder Energy.
“As such, we maintain our ‘neutral’ call with a sum-of-parts valuation target price of 31 sen.”