• Solarvest Holdings has proposed a private placement of up to 6% of its issued capital. Based on the illustrative price of RM1.41/share and issuance of 40.2mil new shares, Solarvest would be raising RM56.7mil from the private placement. The illustrative price of RM1.41/share is 9.6% lower than the 5-day VWAP of RM1.56/share.

• Solarvest would be using RM12mil of the placement proceeds to finance capex for its commercial and industrial (C&I) rooftop solar projects while another RM28.5mil would be used to finance the capex for its CGPP (Corporate Green Power Programme) projects.

• The private placement is estimated to dilute the group’s EPS by 2%-3%. Earnings contributions from the solar projects are expected to be offset by the increase in Solarvest's share base.

• In 2021, Solarvest carried out a private placement of 30mil shares. In the same year also, the group issued 158.5mil warrants on the basis of 1 warrant for every 4 shares held. The warrants have an exercise price of RM1.00/share and expire in February 2026. In October 2023, Solarvest issued a RM50mil Sustainability Sukuk under its RM1bil Sukuk Wakalah programme.

• The group’s net gearing stood at 20.2% as at end-Mar 2023. Gross cash was RM72.6mil while borrowings were RM104.9mil.

• Solarvest is involved in 3 CGPP projects currently. The group has a 70% stake in a 39MWp project while Tenaga Nasional has the balance 30%. Solarvest also has a 30% shareholding in another 39MWp CGPP project and a 10% stake in a 45MWp project.

• Solarvest’s unbilled order book stood at RM242mil as at end-December 2023. Out of these, RM210mil are expected to come from C&I clients while the balance RM32mil from LSS4 projects. Solarvest completed its LSS4 projects in 3QFY24.

• We maintain HOLD on Solarvest with an unchanged fair value of RM1.55/share, based on a fully-diluted FY25F PE of 25x, which is the 2-year average. We ascribe a neutral 3-star ESG rating to Solarvest.

Source: AmInvest Research - 12 Apr 2024