KEY INVESTMENT HIGHLIGHTS

• FY24 revenue slid -65.5%yoy to RM37.6m; core earnings declined -35.4% to RM1.4m, below estimates
• Margins improved due to higher level of residential and C&I rooftop solar jobs
• Outstanding order book of RM196.9m providing earnings visibility for FY25
• Maintain BUY with unchanged TP of RM0.88

Below expectations. Sunview Group's revenue for 1QFY25 dipped - 65.5%yoy to RM37.6m while core earnings declined -35.4%yoy to RM1.4m. This was below expectations at 6.8% of our and 7.6% of consensus' full year estimates.

EPCC and services. Revenue generated from the provision of products and services related to RE declined -66.0%yoy to RM36.6m while the gross profit came in -12.5% lower at RM7.0m. The group attributed this to its focus on the progress of the installation of large-scale solar (LSS), which we believe could mean the purchases of solar modules have previously been charged. Margins have grown from 7.4% in 1QFY24 to 19.0% in 1QFY25, mainly due to higher solar rooftop projects.

CGPP to drive job replenishment. The group's unbilled order book currently stands at RM196.9m, providing Sunview with financial visibility in FY25. We expect at least half of these to be residential and C&I rooftop projects as the group's LSS4 projects gradually reach completion stage.

An immediate boost to its order book would be the EPCC projects from the Corporate Green Power Programme (CGPP). Recall that it secured its first CGPP job in Jun-24, a RM51.9m project from Cenergi Solar Kuala Ketil Sdn Bhd. We expect future contract wins in the CGPP space to add about RM150m to Sunview's order book.

Earnings estimates. We maintain our earnings estimates for now pending a meeting with management today.

Target price. As such, we also maintain our TP for Sunview currently at RM0.88, which was derived by pegging its FY25F EPS of 3.5 sen to a PER of 25x, at a slight discount to its larger peers.

Maintain BUY. As the group takes on more C&I and residential rooftop solar jobs, we can expect a gradual improvement in margins as its remaining LSS4 projects come to an end. Prospects for solar EPCC players such as Sunview also remains bright, with favourable policies such as the National Energy Transition Roadmap (NETR) and the LSS5.

Source: MIDF Research - 2 Sep 2024