Both MIDF and RHB Investment Bank have maintained their “buy” call on Ranhill, with target prices of 70 sen and 75 sen respectively.

In a note today, MIDF said the latest development highlights Ranhill’s power sector growth potential in Sabah.

“We would look to factor in incremental value from the new combined-cycle gas turbine (CCGT) plant upon meaningful progress of plant construction.

“Broadly, we continue to like Ranhill for its earnings expansion prospects,” it said.

On the other hand, RHB said the execution risks for the new power plant are manageable since Ranhill has two existing CCGT plants with capacities of 190MW each via Ranhill Powertron 1 and Ranhill Powertron 2 that have been operating since 1998 and 2010, respectively.

“Under Sabah’s 10-year generation plan, a total of 200MW in generating capacity is expected to come on-stream in 2024 and 2025 – we think this presents opportunities for Ranhill,” it said.

Yesterday, Ranhill’s unit Ranhill Capital Sdn Bhd was notified by the Energy Commission that its consortium with Sabah Energy Corporation Sdn Bhd won the bid for a 100MW power plant in the west coast of Sabah.

With this new contract, Ranhill has now solidified its place as the biggest independent power provider in Sabah with a 30% market share.

The project will involve the design, construction, ownership, operation and maintenance of a 100MW gas-fired CCGT power plant on a build, own, operate and transfer basis. The plant can be expected to be operational by March 1, 2026.

MIDF said the new CCGT plant was initially planned to be constructed in Sabah’s east coast which faces frequent power shortages, but given challenges in securing gas supply, it had been moved to the west coast, riding instead on the upgraded west-to-east power grid to improve eastern Sabah’s power supply.

At mid-day, Ranhill was down 1 sen to 50 sen, giving the company a market capitalisation of RM647.96 million.