• Solarvest secured a RM142m EPCC contract from SM01 for a 30MW CGPP solar plant at Gurun, Kedah

• YTD contract wins totalled c.RM542m, meeting 54% of our full-year FY25 replenishment assumption. This brings outstanding order book to c.RM724m

• Maintain BUY rating with unchanged SOP-derived target price of RM2.00

Secured RM142m CGPP contract

Solarvest has accepted the conditional letter of award from SM01 Sdn Bhd (SM01) for the design, engineering, procurement, construction, and commissioning (EPCC) of a 30MW solar photovoltaic (PV) facility under the Corporate Green Power Program (CGPP) in Gurun, Kedah. SM01 is a special-purpose vehicle jointly owned by Shizen Malaysia (49%), Solarvest Asset Management (33%), and HSS Engineering (18%) for the development and operation of this CGPP solar asset. The EPCC contract is valued at RM142m, and the project will proceed only upon the fulfillment of conditions, including obtaining the necessary approvals and executing the Corporate Green Power Agreement (CGPA) with the off-takers.

Cumulative new wins stood at RM542m, on track to hit RM1bn

This contract win brings Solarvest’s latest order book to c.RM724m, providing revenue visibility until FY26E. The current order book is estimated to include RM482m CGPP projects, while the remaining RM242m are from commercial and industrial (C&I) projects. Inclusive of this win, Solarvest’s cumulative YTD contracts totaled to c.RM542m, on track to achieve its internal RM1bn annual order book replenishment target. Looking ahead, we expect more contracts relating to the CGPP projects, supported by Solarvest’s first refusal rights for c.380MWp/ RM800m EPCC projects.

Maintain BUY

We do not change our earnings forecast, as this contract falls under our replenishment assumption. We reiterate our BUY rating with an unchanged SOP-derived target price of RM2.00, which implies a forward 26x PE multiple based on fully diluted FY26E EPS of 7.6sen. We continue to like Solarvest for its leading position in the solar renewable energy space and for being a prime beneficiary of the nation’s energy transition goal. Key downside risks include government RE policy changes, project execution delays, intense market competition, and volatility in solar module prices.

Source: Philip Capital Research - 25 Nov 2024