Founder Group Limited: Capturing Malaysia's Solar Boom with Recurring Revenue and Government Backing

Malaysia's push to transition to renewable energy is creating a golden opportunity for companies like Founder Group Limited, a leading provider of solar photovoltaic (PV) solutions. With the government targeting 31% renewable energy capacity by 2025 and 40% by 2035, the country's solar market is primed for explosive growth. Founder Group's strategic positioning in this space—through large-scale projects, innovative partnerships, and long-term operations and maintenance (O&M) contracts—could make it a key beneficiary of this energy transformation.

Malaysia's Renewable Energy Push: A Tailwind for Solar

Malaysia's National Renewable Energy Roadmap (MyRER) has set ambitious goals to reduce carbon intensity and expand solar capacity, which is expected to contribute over 80% of the required growth to hit the 2035 target. Key policies like the Reverse Auction Mechanism (RAM) and expanded Net Energy Metering (NEM) program are driving down costs and incentivizing private investment. Meanwhile, tax breaks such as the Green Investment Tax Allowance and the Corporate Renewable Energy Supply Scheme (CRESS) are making solar projects financially attractive.

The government's Large-Scale Solar (LSS) tender programs, including the recent LSS6 round targeting 2,000 MW of capacity, are further fueling demand. By 2026, Malaysia's solar EPCC (Engineering, Procurement, Construction, and Commissioning) market is projected to reach US$350 million, growing at a 23.5% CAGR. This environment is tailor-made for companies like Founder Group, which specializes in solar PV systems and has secured contracts aligned with these initiatives.

Founder Group's Strategic Plays: Projects, Partnerships, and Recurring Revenue

Founder Group's recent contracts highlight its ability to capture both immediate and long-term value in Malaysia's solar market:

1. Rooftop Solar Contract (RM11.6 million / US$2.6 million):
2. Partnering with a prominent solar installer, Founder Group is designing and constructing a rooftop solar PV facility. Following completion, the company will enter into a 15–21-year O&M agreement, ensuring recurring revenue and cash flow visibility.
3. 

4. This model reduces execution risk and provides a predictable income stream, a critical advantage in volatile markets.

5. Floating Solar Farm (RM20 million / US$4.5 million):

6. Subcontracted to build a 15 MW floating photovoltaic (FPV) system in Kuala Langat, this project leverages Malaysia's water bodies to maximize solar generation while minimizing land use.

7. FPV technology aligns with environmental goals, reducing carbon emissions and supporting Malaysia's carbon neutrality ambitions.

8. 100 MW Solar Farm with Hexatoff Group (US$68 million):

9. A conditional Letter of Award (LOA) for a 100 MW solar farm in Tanjung Malim underscores Founder Group's scale-up ambitions. The project, which will power an AI data center, ties renewable energy to Malaysia's tech infrastructure growth.
10. This partnership with Hexatoff Group—a G7-licensed infrastructure firm—highlights Founder's ability to execute large-scale projects and benefit from Malaysia's National Energy Transition Roadmap (NETR).

The Recurring Revenue Edge: A Sustainable Business Model

Founder Group's reliance on O&M agreements and long-term contracts is a critical differentiator. Unlike one-off construction projects, these agreements provide steady cash flow and reduce revenue volatility. For example, the rooftop solar O&M deal alone could generate annual revenue of ~US$1.2–1.7 million, assuming a 15–21-year lifespan. With Malaysia's solar pipeline expanding, such contracts could become a recurring revenue engine.

Risks and Considerations

While the outlook is promising, risks remain:
- Policy Dependency: Malaysia's energy targets and incentives could shift if political priorities change.
- Execution Risks: Large projects like the 100 MW solar farm require flawless execution, and delays could impact cash flows.
- Competition: The solar market is becoming crowded, with global players entering Malaysia's growing LSS tender process.

Investment Thesis: A Play on Renewable Growth

Founder Group's exposure to Malaysia's solar boom, paired with its recurring revenue model, positions it as a compelling investment if the country meets its targets. Key catalysts include:
- Contract wins in upcoming LSS tenders (e.g., LSS6, due Q2 2025).
- Progress on the 100 MW project, which could unlock additional partnerships.
- Growth in O&M revenue as existing projects move from construction to maintenance phases.

Final Take: Buy the Solar Surge

Founder Group is well-positioned to capitalize on Malaysia's renewable energy transition. With a backlog of projects, strategic partnerships, and a business model designed for recurring revenue, it offers a direct play on a government-backed market. Investors bullish on Asia's energy transition should monitor its progress closely.

Risks to Watch: Policy changes, project delays, and rising competition.

Bottom Line: A long-term bet on Founder Group could pay off as Malaysia's solar capacity scales—provided execution stays on track.