PETALING JAYA: Apex Securities Research expects Solarvest Holdings Bhd
to continue the momentum of bagging contracts following its second Corporate Green Power Programme (CGPP) contract win this year.
Solarvest Holdings was awarded an engineering, procurement, construction and commissioning (EPCC) contract worth RM104mil by Suria Hijauan Sdn Bhd, which is 51%-owned by LBS Bina Group.
The EPCC contract entails the construction of a solar energy generating facility with a capacity of 25.4MWac in Seremban.
“We maintain our ‘buy’ recommendation with a target price of RM1.94, based on a sum-of-parts (SOP) valuation. This is Solarvest’s second CGPP contract win this year (year-to-date: RM217.3mil). Looking ahead, momentum is expected to continue, driven by the 800 megawatt (MW) CGPP and the two gigawatt (GW) large-scale solar (LSS5), with shortlisted winners expected in November,” the research house said.
It said the latest win increased Solarvest’s outstanding order book to RM686.3mil, equivalent to 1.4 times the financial year 2024 (FY24) revenue.
“Assuming a 7.5% earnings before interest and tax (Ebit) margin, the project is expected to generate RM7.8mil in Ebit over its cycle, with peak revenue recognition projected in FY26,” it added.
However, it made no revisions to its earnings forecasts, given that the contract win falls within its FY25 order book replenishment assumption of RM2.2bil, with CGPP expected to contribute RM750mil.
Meanwhile, AmInvestment Bank Bhd viewed the contract win positively as it would sustain Solarvest’s earnings.
For FY25, it forecast Solarvest’s revenue to grow by 17% to RM583.2mil on the back of CGPP projects. These are expected to replace the LSS4 projects, which were completed in FY24.
“We maintain a ‘hold’ call on Solarvest with an unchanged fair value of RM1.55 per share. Our fair value of RM1.55 is based on a FY25 price earnings multiple of 25 times, the two-year average,” it added.
