Founder Group Limited ( FGL ) shares are trading lower Tuesday despite the company announcing a new strategic collaboration in the renewable energy sector.

What To Know: The stock initially surged to around $1.45 before pulling back Tuesday morning. The company disclosed it signed a memorandum of understanding with GCL Systems Integration Technology to jointly explore and develop renewable energy projects across Malaysia and other ASEAN countries. The estimated value of these potential projects is up to $220 million.

Under the agreement, Founder Group ( FGL ) and GCL will employ various methods to achieve their objectives, including exchanging information, proposing and implementing specific actions and periodically evaluating the effectiveness of their collaboration.

If any projects are secured, a separate definitive agreement will be executed outlining each company’s commitments.

While the partnership signals growth ambitions and cooperation, the stock’s decline may reflect investor skepticism about the potential for the companies to secure projects. The memorandum of understanding outlines intentions but does not guarantee revenue or project execution at this stage. Investors may also be weighing the long-term timeline required for such projects to materialize and deliver financial returns.

GCL, a Chinese firm listed on the Shenzhen Stock Exchange, brings experience in photovoltaic module manufacturing and energy storage systems, the company said.

“Leveraging GCL’s strong global reputation and expertise in manufacturing and supply of solar PV modules and storage will be an integral part of this cooperation to advance our capabilities to support Malaysia and the surrounding countries’ renewable energy goals and promote a greener environment for our customers,” said Lee Seng Chi, CEO of Founder Group Limited ( FGL ).

“Additionally, we anticipate significant revenue opportunities as we work to establish sustainable projects that will drive top-line growth as well as margin and income expansion which we expect will result in substantial gains in shareholder value.”

FGL Price Action: Founder group shares were down 10.7% at 81 cents at the time of publication Tuesday, according to Benzinga Pro.

Read Next:

Wall Street Drops As Trump Weighs Iran Action, Defense Stocks Jump: What’s Driving Markets Tuesday?

Image via Shutterstock.