JAKARTA – Indonesia's energy transition programme is expected to serve as a long-term positive catalyst for listed companies generating electricity from new and renewable energy (NRE) sources.

The programme is anticipated to benefit especially hydroelectric and geothermal power producers, according to research by Ina Sekuritas Indonesia. Among these are PT Arkora Hydro Tbk (ARKO), PT Kencana Energi Lestari (KEEN), PT Pertamina Geothermal Energy Tbk (PGEO), and PT Cikarang Listrindo Tbk (POWR).

ARKO has bolstered its hydroelectric power plant portfolio with three plants already in commercial operation, boasting a contracted capacity of 42.8 MW. The company, part of the Astra Group, is also developing two new plants in Lampung (5.4 MW) and Tomoni (10 MW).

Meanwhile, KEEN’s net profit for the 2024 fiscal year is projected to grow by 26% year-on-year (yoy). However, during the third quarter (Q3) of 2024, its net profit was under pressure due to challenges faced by its Salu Noling Micro-hydro Power Plant (PLTM) project.

As for PGEO, it holds significant cash reserves amounting to USD 657.6 million as of 30 September 2024, though its revenue and net profit saw a slight decline. The Pertamina subsidiary plans to allocate these funds towards increasing its Geothermal Power Plant (PLTP) capacity to 1 GW by 2026.

Ina Sekuritas also highlights POWR for its exposure to rising electricity demand from data centre industries. This demand is seen as an opportunity to expand POWR’s environmentally-friendly power generation initiatives, backed by solid financial resilience.

Considering these factors, Ina Sekuritas assigns a BUY rating to KEEN and PGEO shares, with target prices of IDR 830 and IDR 1,230 respectively. ARKO and POWR shares, however, receive a NEUTRAL rating, with target prices of IDR 1,000 and IDR 670.

See full report here. (KR/ZH)