Kuala Lumpur: Hong Leong Investment Bank Bhd (HLIB) is optimistic about Malaysia's renewable energy (RE) sector due to its strong structural themes and positive earnings growth cycle, maintaining its 'overweight' call on the industry.
According to BERNAMA News Agency, the investment bank noted that key catalysts for the sector include contract rollouts and fresh RE quotas. It acknowledged that while Malaysia has set ambitious targets, the sector currently suffers from nascent recycling infrastructure and regulations that lag behind those of leading markets.
The country is working on drawing up new guidelines based on existing regulations to specifically manage solar panel waste. Minister of Natural Resources and Environmental Sustainability Nik Nazmi Nik Ahmad mentioned that several measures are under consideration for these guidelines, including a buyback system, specialised collection centres, and an Extended Producer Responsibility (EPR) system, following models seen in other countries.
HLIB pointed out that it is not yet clear if solar waste falls under the category of e-waste as defined under the Environmental Quality (Scheduled Wastes) Regulations 2005. Despite these uncertainties, the investment bank has maintained its 'buy' call on Solarvest Holdings Bhd, with a target price of RM2.25. Solarvest is seen as a major beneficiary of an extended order book upcycle phase, driven by large-scale projects leveraging its dominant positioning.
The company is committed to the proper recycling of defective or damaged solar panels, aligning with broader environmental, social, and governance goals, which help reduce potential long-term risks. At Solarvest, due processes are in place to prevent and minimise waste, and panels are repurposed whenever possible. Otherwise, they are sent to licensed vendors for recycling, who use methods such as cementation, solidification, and recycling, based on the material.
Looking ahead, HLIB suggests that if EPR is implemented, panel manufacturers could collaborate with Engineering, Procurement, Construction and Commissioning (EPCC) players, Operations and Maintenance providers, and local recycling specialists to comply with guidelines. This could support the development of a domestic recycling ecosystem. However, HLIB cautions that the cost-benefit analysis of local recycling versus shipping panels back to manufacturers' home countries, with most panels produced in China, for large-scale recycling, could limit potential revenue streams for local players.