Solarvest Holdings Berhad - First CGPP job award
Mon, 23-Sep-2024 06:08 am
by Tan Sue Wen • Apex Research

Counter

SLVEST (0215)

Target Price (RM)

1.94

Recommendation

Buy

Summary

  • Secured RM113.3m CGPP Contract for a 29.99MW Solar PV Facility, increasing the order book to RM582.3m, equivalent to 1.2x FY24 revenue.

  • We anticipate that one-third of the project value will be recognised in FY25, with peak recognition in FY26.

  • Maintain to BUY recommendation with an unchanged target price of RM1.94 based on SOP valuation.

 

Company Update

  • New contract win. Solarvest, via its wholly-owned subsidiary Atlantic Blue, has secured a Letter of Award (LOA) from P Solar for the EPCC of a 29.99MW Solar PV Facility under the Corporate Green Power Programme (CGPP).

  • CGPP details. The project, with a contract value of RM113.3m, will have a capacity of 29.99MW and will be built at Mukim Pekan, Pahang. Construction will commence immediately, with commercial operations expected within 18 months, by March 2026, assuming no delays. 

  • Boost to order book. This latest win lifts Solarvest’s outstanding order book to RM582.3m, equivalent to 1.2x FY24’s revenue. We expect Solarvest to recognise c. one-third of the project’s value in FY25, with peak recognition in FY26 as related EPCC works progress. Assuming an EBIT margin of 7.5%, the project is estimated to generate RM8.5m in EBIT throughout the project cycle.

  • Moving forward, we foresee a robust pipeline of contract awards, suggesting significant order book expansion over the next 12 months. To recap, Solarvest is actively tendering for EPCC opportunities under the CGPP, with total potential contracts valued at close to RM1bn, including the recent win. 

  • Earnings revision. No changes to our earnings forecasts are necessary, as the job win is within our FY25F order book replenishment assumption.

  • Valuation. We reiterate our BUY recommendation with a target price of RM1.94, based on SOP valuation. Solarvest is well-positioned to benefit from government RE initiatives, its unique in-house solar financing, and its status as the largest solar EPCC player in Malaysia.

  • Risk. Reversal in solar module costs. Heavy reliance on government initiatives. Intense market competition.
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