KUALA LUMPUR: Kinergy Advancement Bhd is trading at a discount, Hong Leong Investment Bank Bhd (HLIB) said, citing the group's growing exposure to Malaysia's energy transition.
The research house assigned a fair value of 53 sen to the stock, implying a 27.7 per cent upside from its last closing price of 41.5 sen, as it forecast record earnings for financial year 2026 (FY26).
HLIB said Kinergy has transformed from a conventional engineering contractor into a developer and owner of energy assets, giving it exposure to some of the country's fastest-growing power segments.
The company's growth is now driven by specialised energy engineering, procurement, construction and commissioning (EPCC) services, alongside a recurring concession portfolio spanning solar, mini-hydropower, biogas and natural gas.
Against this backdrop, Kinergy is well placed to benefit from Malaysia's multi-year gas-fired power investment cycle, driven by rising electricity demand from data centres and the gradual retirement of coal-fired power plants.
"Kinergy's strategic partnership with Thailand-listed B.Grimm Power provides a meaningful competitive advantage through access to critical turbine procurement and project development expertise.
"This has enabled the group to secure the 1.5-gigawatt (GW) TTPC repowering project in Perlis and positioning it to participate in future gas-fired capacity tenders," HLIB said in a note.
The firm also highlighted Kinergy's growing relationship with Petroliam Nasional Bhd (Petronas), built on its proprietary waste heat recovery technology.
The company has secured three major EPCC contracts from Petronas, demonstrating its capability to execute increasingly complex utility-scale energy projects, HLIB said.
"We believe this proven execution track record enhances Kinergy's competitive positioning and increases its likelihood of securing repeat contracts as Petronas continues investing in gas-fired power and lower-carbon infrastructure."
Beyond gas-fired power, HLIB said Kinergy is also well positioned to benefit from Malaysia's long-term renewable energy (RE) expansion, underpinned by the government's target of achieving a 70 per cent RE capacity mix by 2050.
Through its partnership with the Perak State Development Corporation, the company has built a 1.8GW renewable energy pipeline in Perak, providing visibility for future EPCC contracts, concession assets and recurring income.
HLIB expects FY26 to be a record year for Kinergy as major projects enter peak construction, forecasting core net profit growth of 39 per cent, followed by 26 per cent in FY27 and seven per cent in FY28.