KUALA LUMPUR: Reservoir Link Energy Bhd is expected to secure more work upon 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 subcontracting work for engineering, procurement, construction, and commissioning (EPCC) from JS Solar SB for a 50 megawatt (MWac) solar farm in Kedah. 

The estimated value of the works is RM22 million, and it will increase its orderbook 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 orderbook in the second half of 2024.

It said this is because the power producers need to achieve the targeted commercial operation date (COD) for CGPP by December 2025, as guided by authorities earlier. 

"We believe 12–18 months provides sufficient time for EPCC contractors to meet the target," it said in a note. 

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 orderbook.

The firm estimates that the contribution of the subcontractor works to its bottomline is about 5 per cent of the financial year 2025 (FY2025). 

"This is based on our net profit margin for the segment, which is about 3 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 (SOP) valuation target price of 31 sen," it added