CGS International Maintains Overweight Rating On Utilities Sector

KUALA LUMPUR, Oct 8 (Bernama) -- CGS International Securities Malaysia Sdn Bhd is maintaining its “Overweight” call on the utilities sector with positive spillover across the listed market as faster Corporate Renewable Energy Supply Scheme (CRESS) adoption solidifies the sector’s growth.

In a note today, the research firm said faster adoption of CRESS will lead to recurring-income renewable energy asset ownership.

Furthermore, the research firm said CRESS could provide RM12 billion to RM18 billion of engineering, procurement, construction and commissioning (EPCC) tender book over the next two years, or a cumulative RM60 billion to RM110 billion over the longer term.

The report also said companies will need to spend significantly to upgrade and expand grid infrastructure going into the current and next multi-year regulatory framework known as Regulatory Period 5 (RP5).

CGS International said solar EPCC players are direct beneficiaries with strong project award visibility and earnings growth.

“Construction, mechanical & electrical (M&E) and grid-related infra contractors also stand to capture associated works,” it said.

CGS International said Malaysia is entering one of its biggest utilities investment cycles in decades, underpinned by multi-year demand growth and a clearly sequenced policy roadmap.

“While early-cycle beneficiaries, namely EPCC and grid suppliers, have rallied 219–256 per cent since 2024, large-cap utilities have lagged, reflecting the later timing of earnings and project rollouts,” it added.

The top picks are Tenaga Nasional Bhd with a target price (TP) of RM16.60, Malakoff Corp Bhd (TP: RM1.20)  and YTL Power International Bhd (TP: RM6.50).

-- BERNAMA