Maybank Investment Bank Berhad
Date of Report: September 3, 2025
Malaysia’s Renewable Energy Sector Accelerates: SAC Cuts, LSS5+ Pipeline, and BESS Drive New Growth

Malaysian Renewable Energy: Poised for Transformative Growth

Malaysia’s renewable energy (RE) sector stands at a pivotal inflection point in 2025, propelled by robust policy reforms, fresh project pipelines, and strategic industry moves. Maybank Investment Bank Berhad maintains a POSITIVE outlook for the sector, citing key catalysts such as the reduction in System Access Charge (SAC), new Large Scale Solar (LSS5+) and Battery Energy Storage System (BESS) tenders, and a government-mandated push toward a 70% renewable energy mix by 2050.

SAC Reduction: A Game-Changer for Corporate PPAs

The recent SAC revision under the Corporate Renewable Energy Supply Scheme (CRESS) and Community Renewable Energy Aggregation Mechanism (CREAM) programs marks a significant cost reduction for corporate power purchase agreements (PPAs). This move, which follows the July rollout of a new electricity tariff structure, particularly enhances the competitiveness of corporate RE, making it more attractive for large consumers such as data centers. Solarvest emerges as the primary beneficiary, thanks to its strong positioning and project pipeline.

Project Pipeline: LSS5+ and BESS Tenders Set to Boost Sector

Momentum is building behind Malaysia’s RE project pipeline. The Energy Commission recently announced 13 shortlisted bidders for the LSS5+ (2GW) tender, including major consortia and sector leaders. Solarvest, as part of a Malakoff–Solarvest consortium, is bidding for a substantial 470MW project in Perak. Other major players include:

• YTL Power (100MW, Kelantan)
• Sunview-Cypark consortium (100MW, Negeri Sembilan)
• JBB Builders-Samaiden (100MW, Johor)

In parallel, the inaugural BESS tender (400MW/1,600MWh) has already seen RFPs submitted, with awards anticipated by October 2025. These developments spell a strong pipeline of Engineering, Procurement, Construction, and Commissioning (EPCC), Operation & Maintenance (O&M), and recurring income opportunities for sector participants.

Key Beneficiaries: Spotlight on Solarvest and Cypark Resources

Solarvest (SOLAR MK)
Solarvest is Maybank’s top pick in the Malaysian RE sector, given its robust MYR1.18 billion orderbook and expanding recurring income base, driven by:

• 50MW LSS4 solar asset
• 90MW Corporate Green Power Programme (CGPP)
• 60MW LSS5 solar participation
• 30MW Brunei project

Strategic stakes (30%) in SIW Manufacturing and Kee Ming Electrical further strengthen Solarvest’s vertical integration with exposure to solar manufacturing and electrical works. Recurring income streams are on a steady upward trajectory.
Cypark Resources (CYP MK)
Cypark offers investors exposure to both solar and waste-to-energy segments. However, balance sheet constraints currently limit near-term upside potential. Despite this, Cypark is well-positioned to benefit from incremental job flows, especially as part of the Sunview-Cypark consortium in LSS5+.
Other RE players, including Samaiden, Pekat, Sunview, and Northern Solar, are also expected to pick up incremental contracts and project flows in the evolving sector landscape.

Peer Comparison: Financials of Malaysian Renewable Energy and Utility Players

Valuation Premiums: Justified by Earnings Visibility and Pipeline Strength

Malaysian RE developers trade at forward price-to-earnings ratios above 20x, a premium justified by their superior earnings visibility and robust job flow pipeline. Estimated project internal rates of return (IRRs) are 7–8% for solar projects, potentially rising to 9–11% when coupled with BESS under structured offtake arrangements. With SAC reductions, new tenders, rising corporate demand, and a long-term 70% RE target, sector fundamentals are set to strengthen further.

Solarvest: Sum-of-Parts Valuation and Target Price

Maybank’s valuation pegs Solarvest’s target price at MYR2.64, based on a sum-of-parts (SOP) approach that incorporates project assets, manufacturing interests, electrical works, and net debt.

Target Price (MYR): 2.64

Key risks to this outlook include delays in solar asset commissioning, rising material and labor costs, and margin pressures in solar projects.

Sector Outlook: Premiums Warranted, Fundamentals Strengthening

Malaysian RE stocks command premium valuations due to their robust earnings visibility and strong pipeline of sector job flows. The combination of supportive policy reforms, lower access charges, fresh tenders, and surging corporate demand is expected to further solidify fundamentals. The government’s long-term target of a 70% RE mix by 2050 (up from 29% currently) sets a clear path for future sector growth.

Emerging Opportunities Beyond Listed Players

Beyond the listed names, large-scale joint ventures such as Gamuda’s partnerships with SD Guthrie (1.2GW solar) and Gentari (1.5GW hybrid solar-BESS) demonstrate the scale of future opportunities and positive spillover effects for local EPCC contractors.

Conclusion: Malaysia’s Renewable Energy Sector—Ready for the Next Phase

With clear policy direction, substantial project pipelines, and strong corporate appetite for sustainable energy, Malaysia’s renewable energy sector is on track for accelerated growth. Solarvest remains the standout listed play, with significant upside, while Cypark and other players are poised to benefit from the sector’s ongoing transformation.
Investors should view the sector’s premium valuations as justified by superior earnings visibility and a robust order pipeline. However, it is essential to monitor key risks such as project delays and rising costs. As Malaysia advances toward its ambitious RE targets, the sector presents compelling opportunities for both strategic investors and active market participants.