Solarvest Holdings Berhad - Secures 500MWac EPCC Contract from TNB
Wed, 19-Mar-2025 07:13 am
by Tan Sue Wen • Apex Research

Counter

SLVEST (0215)

Target Price (RM)

2.000

Recommendation

Buy

Summary

  • Secured RM401m EPCC Contract for a 500MWac Solar PV Facility, increasing the order book to RM1.28bn, equivalent to 2.6x FY24 revenue. This win represents 25% market share in LSS5 EPCC jobs, surpassing the historical average of 20% in past cycles.

  • Near-term job flow momentum is expected to continue, primarily driven by LSS5 and LSS5+, with the combined impact creating an additional RM10bn in the potential order book, sustaining near-term growth prospects.

  • Maintain BUY recommendation with an unchanged target price of RM2.00, based on a sum-of-parts (SOP) valuation, and appraised with a three-star ESG rating.

 

Secures 500MWac Contract. On 17 Mar 2025, SLVEST has been awarded an EPCC contract by TNB, to develop a 500MWac large scale solar photovoltaic (LSSPV) power plant in Bukit Selambau, Kedah. The contract is valued at RM401m and is expected to be completed by 31 Jul 2027 (Q2FY28), spanning a two-year period. The scope of work covers engineering, procurement, construction, and commissioning, excluding major equipment procurement such as solar PV panels, inverters, combiner boxes, and mounting structures.

 

Our Take. We view the contract positively as it would sustain SLVEST’s earnings. Assuming a conservative PBT margin of 5%, this could translate to an annual PBT of RM10m, which would represent 20% of our forecasted Group PBT for the year. This latest win beefed up SLVEST’s unbilled order book to RM1.28bn, equivalent to 2.6x of FY24 revenue, providing strong earnings visibility through FY28F. The contract represents 25% market share of EPCC jobs in LSS5, surpassing the historical average of 20% in past cycles.

 

Outlook. Over the near term, we expect job flow momentum to remain strong, primarily driven by LSS5, as awarded project owners are required to achieve financial close with the EC by the end of Mar 2025. This will likely be followed by LSS5+, where bidders had a very short window of just over one month to prepare their bid submissions. Hence the bidding process is expected to be relatively quicker, likely concluding by May 2025. We believe LSS5+ will likely see further price revisions, with unsuccessful LSS5 bidders likely to resubmit their bids under LSS5+. Nevertheless, the combined impact of LSS5 (remaining quota) and LSS5+ could translate into a potential RM10bn incremental order book, ensuring SLVEST’s near-term growth prospects.

 

Earnings revision. No changes to our earnings forecasts, as the contract win falls within our FY25F order book replenishment assumption of RM2.2bn.

 

Valuation. We maintain our BUY recommendation with an unchanged TP of RM2.00 based on sum-of-parts (SOP) and appraised with three-star ESG rating. We believe Solarvest is well-positioned to benefit from government RE initiatives, leverage its unique in-house solar financing, and capitalise on its status as Malaysia’s largest solar EPCC player.

 

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

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