Solarvest Holdings Berhad - Secures 29.99MWac Solar Contract from LSS5
Thu, 27-Mar-2025 07:14 am
by Tan Sue Wen • Apex Research

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SLVEST (0215)

Target Price (RM)

2.03

Recommendation

Buy

Summary

  • Secured RM103.1m EPCC Contract from LSS5 for a 29.9MWac Solar PV Facility, bumping up unbilled order book to RM1.4bn, equivalent to 2.8x FY24 revenue. 

  • Near-term job flow momentum is expected to carry on, primarily driven by LSS5 and LSS5+, with the combined impact estimating an untapped incremental order book of RM10bn, sustaining near-term growth prospects. To date, Solarvest has secured 26.5% market share of EPCC jobs in LSS5, surpassing the average of 20% in past LSS cycles.

  • Maintain BUY recommendation with an unchanged target price of RM2.03, based on a sum-of-parts (SOP) valuation, and appraised with a three-star ESG rating.

 

Secures 29.9MWac Contract. Solarvest’s wholly-owned subsidiary, Atlantic Blue has secured an EPCC contract under LSS5 from SV Flux to develop a 29.99MWac large-scale solar photovoltaic (LSSPV) power plant in Seberang Perai Selatan, Pulau Pinang. The contract is valued at RM103.1m and is expected to be completed by 31 Jul 2027 (Q1FY28), spanning a two-and-a-half-year period.

 

Our Take. We view the contract positively, as it should sustain Solarvest's earnings over the foreseeable future. Assuming a PBT margin of 8%, this could translate to an annual PBT of RM3.3m, which would represent 4.4% of our forecasted Group PBT in FY25. This latest win bumps up Solarvest’s unbilled order book to RM1.4bn, equivalent to 2.8x of FY24 revenue, providing strong earnings visibility through FY28F.

 

Outlook. We expect the EPCC job momentum from LSS5 to carry on over the near term, as awarded project owners are required to submit PPA documents to Tenaga by the end of March. While LSS5 project developers have been granted a one-year extension for the COD to 2027 (previously the end of 2026), we believe some players will still complete their projects earlier to mitigate the risk of penalties. EPCC job flow will likely continue with LSS5+, with the bidding process expected to conclude by 2QCY25, given the very short window for bid submissions. Combining the impacts of LSS5 and LSS5+, we estimate there is still an untapped incremental order book of RM10bn, ensuring Solarvest’s near-term growth prospects. YTD, Solarvest has secured a 26.5% market share of EPCC jobs in LSS5, surpassing the historical average of 20% in LSS cycles.

 

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 RM2.03 based on sum-of-parts (SOP) and appraised with three-star ESG rating. We believe Solarvest is wellpositioned 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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