Elridge Energy to gain from palm kernel shells, wood pellets industry growth: PublicInvest
12 Aug 2024
The industry for palm kernel shells (PKS) and wood pellets in the Asia Pacific region is projected to expand by 8.9 per cent and 8.6 per cent, respectively, from 2024 to 2026, according to Public Investment Bank Bhd.
The firm noted that Elridge Energy Holdings Bhd stands to benefit from industry growth due to rising exports, government renewable energy initiatives, and increasing demand from end-user industries.
Additionally, Malaysia’s status as a major oil palm producer with ample forest resources supports the availability of raw materials.
PublicInvest also noted that Elridge Energy’s growth will be fuelled by increasing its production capacity through the establishment of three new factories.
The company plans to build factories in Pasir Gudang and Lahad Datu, each equipped with two palm kernel shell (PKS) production lines, each with an annual capacity of 240,000 metric tonnes (MT), and situated near ports.
Additionally, Elridge will construct a similar facility in Kuantan and may set up a temporary factory while the permanent one is under construction.
According to PublicInvest, these new locations are expected to commence operations in the fourth quarter of the financial year 2024 (4QFY24) for Pasir Gudang and Kuantan, and in the second quarter of the financial year 2025 (2QFY25) for Lahad Datu.
The aim is to lower transportation costs and reduce dependence on Port Klang.
The firm also noted that Elridge Energy’s competitive strengths are highlighted by several key factors.
“The company benefits from the strategic location of its well-equipped Port Klang factory. It ensures compliance with the requirements of both local and international customers,” it said.
PublicInvest said that Elridge Energy’s products are adaptable, catering to a range of end-user industries.
“Elride Energy offers two types of biomass fuel products, namely PKS as well as wood pellets. Both are suitable for heat and electricity generation in manufacturing industries and biomass power plants, respectively. The diverse applications of these products should increase demand and provide the company with opportunities to expand its customer base,” it added.
The firm has a fair value of 46 sen for Elridge Energy.
“The group’s earnings growth largely hinges on the speed at which its new PKS production line becomes operational and the growth in demand from end-user industries, which is influenced by government renewable energy initiatives,” it adds.
Source: NST
