• Maintain BUY (TP: RM2.23). Solarvest’s 1HFY25 net profit of RM17.8mn (+29.6% YoY) was deemed within both our and consensus expectations at 39%. The company’s 2QFY25 headline profit rose by 32.1% YoY to RM9.5mn thanks to improved margins from the commercial and industrial segments, lower solar panel prices as well as steady recurring income from LSS4 assets. Its revenue on the other hand declined by 26% YoY due to the completion of all LSS projects, mitigated by EPCC CGPP jobs during the quarter. No dividend was declared. We expect the company to thrive in 2HFY25 leveraging on an unbilled EPCC order book of RM961mn, stemming from CGPP replenishment in the near term. Maintain a BUY call on Solarvest with an unchanged SoP-derived TP of RM2.23. We ascribe 20x FY26F PER for its EPCC segment and DCF at a WACC of 5.4% for its LSS4/5, CGPP, and Powervest assets.

• Key highlights. We are positive with the recent CGPP EPCC jobs win announcement for 29.99MWac located in Kuala Muda, Kedah which could bring the Group’s CGPP effective owned capacity to 58.3MWp (from 43.5MWp) upon COD. However, the conditions and precedents include i) SM01 Sdn Bhd is approved as NEDA participant on/after 30 Jan 2025, ii) CGPA execution with off-takers, and iii) registration of land lease by June 2025.

• Earnings Revision. No changes.

• Outlook. We favour the stock as it is well positioned for a rapid expansion via (i) EPCC order book through CGPP, LSS5 and NEM as well as (ii) PPA assets for long-term recurring income. Additionally, we think Solarvest has more room for its portfolio growth, anchored by NETR goals and TPA in the power market.

Source: BIMB Securities Research - 26 Nov 2024