Thursday, April 7, 2011

Renewable energy stocks perk up

The rally of renewable energy stocks on Bursa Malaysia could last a couple of days, says a head of research

Kuala Lumpur: Renewable energy (RE) stocks were actively traded for the second day running, triggered by the passing of the RE Act 2010 on Monday by the Dewan Rakyat.

"Passing of the Act is a major boost to RE companies," said Edmund Tham, Mercury Securities head of research.

The rally could last a couple of days, he added.

Tham said KUB Bhd, which has an energy unit, and Fitters Diversified Bhd might be the traders' pick if the rally were to pick up momentum.

"KUB is also an election play stock, but trading momentum on Fitters is picking up steam," Tham said.

Fitters was among the most actively-traded shares in the market and off the market.

The stock closed 3 sen at 98 sen a share, while the warrants closed at 51.5 sen, up by 10 sen.

There were also some 15 million Fitters warrants, representing more that 20 per cent of the total warrants in the market, being traded off-market at 42 sen apiece.

On Monday, the Dewan Rakyat approved the RE Bill, which will now have to get the approval from the Dewan Negara before it becomes a law.

Late last month, Cypark Resources Bhd group chief executive officer Daud Ahmad told Business Times once the RE Act becomes a law, it will mean higher feed tariff for companies supplying RE to Tenaga Nasional Bhd.

This is because the national utility will have to pay 95 sen per kilowatt hour (KWh) for solar power energy from 21 sen per KWh currently.

Cypark is the country's largest publicly-traded RE company.

Its shares have gone up by over 200 per cent in six months. The stock closed at RM3.17 yesterday.

"Cypark has done tremendously well," said Pong Teng Siew, Jupiter Securities head of research.

According to Pong, the volume in Cypark is better than the daily average volume of some blue-chip companies.

Pong said some ethical funds might be taking positions in RE companies but in the longer term, if these companies can produce the financial results to back up the viability of RE as a commercial source of energy, broader-based funds and investors might join in the fray.

Read more: Renewable energy stocks perk up

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