Valuation / Recommendation

We have a SUBSCRIBE recommendation on Sunview Group Berhad with a target price of RM0.60 based on FY24F EPS of 4.4 sen and a PE of 13.7x in line with its peer’s average.

We like the stock for its attractive growth prospect on the back of an increase in solar photovoltaic (PV) installation demand under the government’s roadmap to achieve a 31% and 40% RE generation mix by 2025 and 2035. The Group has a 4% market share by business value. The target price represents a potential return of 106.9% over the IPO price.

Investment Insights

Proven track record. The company have completed 98 EPCC of rooftop solar PV facility projects ranging from industrial, residential, and commercial buildings with a cumulative installed capacity of 23.08 MWp. The company also completed the provision of construction and installation for 6 LSS PV plants as a subcontractor and secured 7 new LSS PV plant projects under the LSS 1, LSS 2, LSS 4, and NEDA programme with an aggregate installed capacity of 178.0 MWac and a contract value of RM658.04m expected to be completed by FYE 2024.

With the leadership of its CEO Ong Hang Ping who has more than 12 years of experience in the renewable energy industry, the company was able to achieve a 3- year revenue CAGR of 159.9% from FYE2019 to FYE2022.

Solid order book. With a strong order book of RM558.34m as of 30th August 2022 expected to be fully recognised by FY24, we think that the company is well- positioned to benefit from the increase in solar photovoltaic (PV) demand under the Government’s Energy Transition Plan 2021 – 2040 with a target to increase the share of renewable energy in the total installed capacity in Malaysia to 31% in 2025 and 40% in 2035.

Expansion into other renewable energy (RE) facilities. The company plans to leverage on its experience and track record in EPCC of solar PV facilities to venture into the EPCC of other RE facilities like biogas plants which is designed to generate electricity by using waste materials such as agricultural waste. The company also intends to set up a new office to expand its business in Johor to address potential opportunities in the EPCC of rooftop solar PV facilities and target the commercial and industrial applications in the Southern region.

Risk factors. (1) Changes in government policies and regulations relating to power generation, transmission, and distribution. (2) Advancement in technological developments in power generation may result in other more cost-efficient renewable generation methods. (3) Inability to secure new projects.

Source: Mercury Securities Research - 28 Sep 2022