SD Guthrie Bhd is in a favourable position to ramp up its future renewable energy (RE) business, partly thanks to the recently launched Kerian Integrated Green Industrial Park (Kigip) master plan in Perak.

Maybank Investment Bank Research said besides Kigip, Penang could also be a potential buyer of RE from SD Guthrie’s solar farm at Kigip to offset carbon dioxide generated at its Silicon Island project.

“While the master plan has been launched, it is still unclear what SD Guthrie’s final equity structure in Kigip will be. What we know is Kigip will provide SD Guthrie with land disposal gains (when it opens up in stages) while its solar farm (likely 100% owned) will provide future recurring income.

“The project could house 157MW to 178MW of solar capacity, and form part of the company’s ambition to grow its RE capacity to 1,000MW in the next three to five years,” the research house added.

Kigip borders the states of Penang and Kedah. The master plan would be developed through the collaboration of the federal government, Perak state government, SD Guthrie, and Permodalan Nasional Bhd.

Solar will be Kigip’s main source of power, and the project aims to attracting high quality investments especially in sectors such as electrical and electronics.

This 1,000-acre Kigip site, to be developed in stages, would be supported by SD Guthrie’s 660 acre solar farm that would be built adjacent to the site.

Besides Kigip, there are other opportunities and potential projects in line with federal and state governments’ initiatives.

The brokerage said its earnings forecasts have yet to incorporate contributions from Kigip or large scale solar farms, noting that it is maintaining its “buy” call on the stock with a target price of RM4.96 per share.

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