TA SECURITIES (MAY 25): The Ministry of Energy Transition and Water Transformation launched the Sustainable Rebate and Incentive Assistance (SuRIA) home initiative, which commences on June 1. Under the initiative, domestic users who install solar systems under the Solar Accelerated Transition Action Programme (Solar ATAP) by Dec 31, 2026, are eligible to receive a rebate of RM600 for every 1kWac of solar installation up to a maximum of RM3,000, or 5kWac. The SuRIA initiative is expected to benefit up to 250MWac of residential solar installations based on RM600 per kWac rebate and a total allocation of RM150 million for the programme.
Based on the latest projections by Tenaga Nasional Bhd (KL:TENAGA) (as at April 30, 2026), the automatic fuel adjustment rate is expected to turn from a rebate of -0.47sen/kWh in April 2026 to a surcharge of +1.38sen/kWh in May 2026 and +2.92sen/kWh in June 2026 due to the rising fuel cost.
The potential 250MWac SuRIA-backed residential solar installations translate into engineering, procurement, construction and commissioning (EPCC) prospects worth an estimated RM875 million to RM1 billion.
Northern Solar Holdings Bhd (KL:NORTHERN) and Verdant Solar Holdings Bhd (KL:VERDANT) are among the key beneficiaries of the SuRIA incentive given their exposure to rooftop solar. Incumbents such as Samaiden Group Bhd (KL:SAMAIDEN) (“buy”, target price: RM1.96), Sunview Group Bhd (KL:SUNVIEW) (“hold”, TP: 39.5 sen), Solarvest Holdings Bhd (KL:SLVEST) and Pekat Group Bhd (KL:PEKAT) are also potential beneficiaries.
We maintain our “overweight” stance on the utilities sector, premised on demand-supply tightness in the generation market, record renewable energy (RE) rollout, grid capital expenditure (capex) expansion to accommodate the energy transition and demand growth, and potential expansion of gas supply infrastructure.
Our top sector picks are: (i) Tenaga (“buy”, TP: RM18), as a large-cap play into the energy transition given a step-up in grid capex to accommodate expansion in variable RE capacity and demand growth; (ii) Samaiden, as a key beneficiary of an expected record high RE rollout over the next two to four years; (iii) Malakoff Corp Bhd (KL:MALAKOF) (“buy”, TP: RM1.29) for capacity replenishment, being one of the front runners for the Energy Commission’s NewGen26 generation capacity tender; and (iv) Ranhill Utilities Bhd (KL:RANHILL) (“buy”, TP: RM2.71), as a beneficiary of data centre and Johor-Singapore Special Economic Zone-driven demand.
CIMB SECURITIES (MAY 26): Section 3 of the West Coast Expressway (WCE) is scheduled to be opened to traffic by 1Q2027. While the near completion of the WCE removes a key overhang for the stock, we cut our FY26/27/28F core profit forecasts for IJM Corp Bhd (KL:IJM) by 4.6%/19.4%/19.9% respectively to RM321 million/RM367 million/RM409 million, from higher logistics and building materials costs and a 2.2% and 5% reduction in Kuantan Port’s FY27 and FY28F cargo volume projections to 22.2 million and 23.3 million tonnes respectively.
Following our earnings downgrades, we lower our SOP-based TP to RM2.90 (from RM3.50 previously) as we roll over our valuation base to FY27F. We maintain “buy” pending clarity on the group’s value-unlocking proposals, which may include the potential spin-off of its construction and toll concession units, divestment of operations in India and further capital management initiatives.
To expand its industrial footprint, IJM signed a joint-venture agreement with Southern Catalyst Sdn Bhd, the master developer of the Southern Catalyst Innovation District, to co-develop a 317-acre industrial and commercial project in Sedenak, Kulai (gross development value: RM2 billion).
CGS INTERNATIONAL (MAY 25): Hibiscus Petroleum Bhd’s (KL:HIBISCS) 3QFY26 core net profit of RM63 million was 27% lower quarter on quarter due to higher effective tax rate as Ebitda was down only 3% q-o-q. Revenue fell 5% q-o-q due to lower volume sold from PM3 CAA, North Sabah and Brunei. Nevertheless, operating costs fell 7% q-o-q due to lower maintenance activities.
The Ebitda was 17% lower y-o-y as the US dollar fell 11% y-o-y against the ringgit. Nevertheless, the company delivered a core net profit in 3QFY26, compared with a core net loss in 3QFY25.
Hibiscus declared an interim DPS of three sen in 3QFY26, for a total DPS of seven sen for 9MFY26, and guided for a DPS of 10 sen for FY26F, representing yield of 4.7% and payout ratio of 23% based on our FY26F EPS forecast. The company declared a DPS of 9 sen (4.3% yield; 57% payout) in FY25.
We have pencilled in FY27F DPS of 20 sen (9.5% yield; 17% payout) as we expect its core net profit to grow 168% y-o-y to RM860 million, on top of 179% y-o-y core earnings growth in FY26F. We reiterate “add” with a higher discounted cash flow-based TP of RM2.85.
RHB RESEARCH (MAY 26): This is perhaps Karex Bhd’s (KL:KAREX) softest quarter since listing, bearing the brunt of a weak US dollar against the Thai baht and ringgit alongside persistent tariff burdens that led to gross profit margins declining to 27%.
For its third financial quarter ended March 31, 2026 (3QFY26), its core loss widened to RM6.4 million, bringing 9MFY26 core net loss to RM2.5 million. As year-to-date losses have already overshot our FY26F loss of RM2 million, we deem this set of results as below expectations.
We expect a loss before tax (LBT) of RM5.5 million for 4QFY26, which represents a sequential improvement from 3QFY26’s LBT of RM7.2 million. In our view, the gradual rollout of average selling price hikes, stable US dollar environment in 4QFY26 and US tariff refund should help offset near-term margin risks from rising input costs. Following these adjustments, our TP is lowered to 56 sen. We upgrade the stock to “buy” from “neutral” as we believe the near-term negatives are fully priced into the valuation (now trading at 2027 PER of 15.4 times, at about a 20% discount to its peers).
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