Elridge Energy Holdings Berhad - New Thailand PKS MOU Expands Export Footprint
Thu, 22-Jan-2026 09:50 pm
by Tan Sue Wen • Apex Research

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ELRIDGE (0318)

Target Price (RM)

0.97

Recommendation

Hold

  • ELRIDGE entered into an MOU with Berkana Power Company Limited for the supply of ~100,000 metric tonnes per annum of PKS, including GGL-certified PKS, to the Thailand market.

  • We view this development positively, in line with the Group’s strategy to raise its long-term sales mix toward c.60% (from an estimated ~40% currently). Assuming conversion into longer-term offtake, contracted volumes would rise to c.34% of current production capacity. 

  • Maintain HOLD with an unchanged TP of RM0.97, based on 25x FY26F EPS of 3.9 sen.

 

Secures MOU for Supply of 100kt PKS to Thailand Market. ELRIDGE has entered into a Memorandum of Understanding (MOU) with Berkana Power Company Limited for the supply of an estimated 100,000 metric tonnes per annum of palm kernel shells (PKS), including Green Gold Label (GGL)-certified PKS, to the Thailand market. The proposed supply is expected to commence in 2026, with c.10 shipments per annum. Pricing will be reviewed quarterly.

 

Our Take. We view the MOU as a constructive development, marking ELRIDGE’s entry into a new customer relationship and strengthening its presence in the Thailand biomass market. While the arrangement is non-binding and structured over one year, it establishes a commercial framework for purchase order issuance and provides optionality for repeat or longer-tenure offtake, in line with the Group’s strategy to raise its long-term sales mix toward c.60% (from an estimated ~40% currently). Assuming conversion into longer-term offtake, long-term contracted volumes would rise to c.34% of current production capacity.

 

Outlook. We remain positive on ELRIDGE’s outlook, supported by (i) structurally resilient PKS demand, (ii) ongoing capacity expansion of c.17% to ~1.68m tonnes per annum by year-end, and (iii) continued progress in offtake diversification. Japan remains the Group’s primary demand base, supported by an estimated 600 operating biomass power plants, implying sustained fuel demand despite the tapering of new large-scale FIT approvals post-2026, with risks skewed toward price re-basing rather than volume displacement. Beyond Japan, ELRIDGE continues to expand its export footprint, with Thailand representing a key incremental market, alongside growing exposure to Korea, China and Indonesia. ELRIDGE’s patented screening and processing technology, which typically reduces moisture content to c.8-12% (vs ~15-20% for untreated PKS), results in a higher net calorific value and improved fuel consistency, positioning the Group well to meet increasingly stringent boiler and emissions requirements, and supporting customer retention and longer-term offtake.

 

Earnings revision. No change to our earnings forecasts, as the development is within expectations.

 

Valuation & Recommendation. We maintain our HOLD recommendation with a TP of RM0.97, based on 25x FY26F EPS of 3.9 sen and a three-star ESG rating. ELRIDGE remains fundamentally attractive given its (i) predictable earnings visibility and cash flows with c.40% of existing capacity secured under long-term contracts, (ii) ample room for capacity expansion to cater for rising demand, (iii) leadership position with c.20% market share in Malaysia, and (iv) status as a certified GGL manufacturer, which supports commands better margin.

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