• We initiate coverage on Solarvest Holdings Berhad (Solarvest) with a BUY recommendation and TP of RM2.23, derived using Sum of Parts (SoP) methodology.

• Solarvest is the market leader in solar EPCC projects in Malaysia. Based on its track record of 1.3GWp of solar PV system installed, we estimate it holds circa 20-25% market share in the segment.

• We expect its earnings to grow at 30% CAGR to RM73mn in FY24- 27F to be driven by (i) expansion in EPCC orderbook, and (ii) expansion of PPA assets to 420MW that will generate long-term recurring income.

• The stock price is currently trading at 52x forward PER which is in line with its 4-year average PER. We think this is justified by its enormous earnings growth potential, leveraging on the country’s ambitious solar target amid energy transition goals.

A Comprehensive Solar Solutions Provider

Solarvest was established in 2012 and serves as a turnkey solar engineering, procurement, construction, and commissioning (EPCC) player, operation, and maintenance (O&M) provider covering large scale solar (LSS) farm, and rooftop solar (commercial and industrial properties and residential segment). The group also owns a solar financing provider named Powervest and an EV charging and mobility solution called Powerbee Sdn Bhd. It commands circa 20-25% of the market share as a solar provider in Malaysia currently.

Transitioning to Asset Owner and Developer for Sustainable Income

We like Solarvest long-term plan to gradually move from major EPCC player to asset developer with revenue contribution target of 70:30% from EPCC and solar assets operation respectively. As of date, it operates circa 68MW of asset portfolio. The group aims to achieve 1GW of solar assets by 2027.

Earnings Forecast

We project Solarvest’s revenue to grow at a 26% CAGR to RM985mn over FY24-27F, driven by expansion in EPCC orderbook from CGPP, LSS5, NEM3.0. Additionally, we anticipate it to expand its solar assets under operation to 420MW by 2027. Hence, core PATAMI is projected to grow at 30% CAGR, reaching RM73mn by FY27F.

Initiate Coverage on Solarvest with a BUY; TP RM2.23

We initiate our coverage on Solarvest with a BUY recommendation and TP of RM2.23 based on SoP methodology. We assign 20x FY26F PER to its EPCC segment and applies a discounted cash flow (DCF) method with 5.4% WACC for its LSS4/5, CGPP, and Powervest assets

Source: BIMB Securities Research - 20 Nov 2024