HLIB Research said Solarvest’s runway for order book replenishment currently looks “robust”.
PETALING JAYA: Solarvest Holdings Bhd
is still a “buy” despite marginal contribution from segments other than its engineering, procurement, construction and commissioning (EPCC) business and electricity generation from its plants under the government’s fourth phase of the Large Scale Solar initiative, analysts say.
Hong Leong Investment Bank (HLIB) Research said in a report contributions from those segments were expected to be lumpy in nature.
The research house said Solarvest’s runway for order book replenishment currently looks “robust” with a remaining RM714mil of EPCC work under the Corporate Green Power Programme (CGPP) to be converted – leading to a new high in its unbilled EPCC order book of more than RM1bil.
“Additionally, we see the company as a prime beneficiary of the upcoming Corporate Renewable Energy Supply Scheme (CRESS) programme due to its quality CGPP off-takers and strong business partners.”
The research house said on the whole, Solarvest’s financial year ending March 31, 2025 (FY25) looked to be a “back-loaded year” given the ramp-up period for CGPP projects and the positive seasonality effect in the fourth quarter.
“The company should also benefit from lower procurement costs due the ringgit strengthening but we anticipate effects filtering through slightly later,” it added.
The research house also noted that the CRESS programme had been formalised with the recent release of guidelines.
“CRESS allows renewable-energy developers to negotiate pricing with consumers with a market-based approach on a rolling basis.
“Conceptually, this can cater to strong demand for renewable energy from Malaysia’s huge data centre pipeline.”
HLIB Research said it was not making any change to its forecasts for the solar-energy group and was maintaining a “buy” call on the stock, with a target price of RM2.
The target price is driven by a price-earnings multiple of 25 times the company’s EPCC business and a discounted cash flow of its recurring income assets.
“We like the stock for its strong position within the growing domestic solar industry, regionalised operations and strong business partners,” the research house said, adding that the risks for the group included project execution, delays from political hiccups, raw-material prices and labour shortages.
