Solarvest to benefit from clean-energy demand
07 Sep 2023
The growing need for clean energy across the nation benefits companies like Solarvest Holdings Bhd, enabling it to strengthen its order book.
As it is, Solarvest’s outstanding unbilled order book stands at RM457mil and that translates to a healthy 1.28 times cover on financial year 2023 (FY23) engineering, procurement, construction and commissioning (EPCC) revenue.
Projects on hand will contribute financially towards FY24 and FY25.
Hong Leong Investment Bank Research (HLIB Research) foresees plenty of opportunities in the pipeline for the company to grow its order book in the coming quarters.
Solarvest is a key beneficiary of the National Energy Transition Roadmap (NETR) and renewable energy (RE) exports and potential awards of Corporate Green Power Programme (CGPP) quotas, EPCC contracts and next year’s budget, the research house said.
HLIB Research noted in a report, a recent 90MW CGPP win crystalises a growing recurring income stream for Solarvest.
Solarvest’s results for the first quarter of financial year 2024 (1Q24) showed a revenue of RM143.4mil and core profit after tax and minority interest of RM6.7mil.
HLIB Research stated the 1Q24 performance beat its expectations but was guided to be “soft” versus the rest of FY24 which is expected to be driven by EPCC margin upticks and commercial operations date of its large-scale solar (LSS4) plants.
The research house added Solarvest’s 50MWac LSS4 plants will progressively lift FY24 bottom-line by about RM5mil-RM6mil.
Solarvest announced earlier it had, through three separate consortiums, obtained a cumulative 89.97MW quota from the first batch awards of the CGPP programme. Upon completion of the roll-out, the power capacity will give a bottom-line uplift of about RM9mil a year on average, starting in FY26.
As a dominant player in the solar ecosystem Solarvest should benefit from NETR initiatives like the 500MW solar parks to be co-developed by Tenaga Nasional Bhd and 1GW by UEM Group Bhd through EPCC opportunities, HLIB Research said.
The framework for Malaysia’s electricity export is still under development and is expected to be announced in the coming months. Due to higher household tariffs in Singapore, EPCC margins and project internal rate of return is expected to be higher.
Solarvest is looking to partner with a Singapore electricity retailer to capitalise on this opportunity.
The research house maintained its “buy’’ call on Solarvest with a target price of RM1.55 a share. Risks to its call include issues with project execution, delays from political hiccups, materials price changes and labour shortage.
Source: The Star
