Solarvest’s 4QFY25 core net profit (CNP) rose 47.6% qoq and 135.2% yoy to RM23.9m, exceeding ours and consensus full-year FY25 estimates at 113% and 118% respectively. The outperformance was driven by stronger-than-expected execution in the EPCC division.
Near-term order book replenishment remains robust primarily fuelled by LSS5, with EPCC contracts typically awarded within six months of project developer appointment. Solarvest has secured a 26.5% market share in LSS5 EPCC awards, on track to capture ~30% following recent 500MWac contract wins from TNB, demonstrating its strength in large-scale projects.
As of 31 March 2025, Solarvest’s unbilled order book stood at RM1.2bn, equivalent to 2.3x its FY25 revenue.
After rolling over our valuation base year to FY27F, we maintain a BUY recommendation with a higher TP of RM2.61 (previously RM2.03), based on a SOP valuation and a three-star ESG rating.
Above expectations. After adjusting for a forex impact (+RM3.3m) and other items (+RM0.1m), Solarvest's 4QFY25 core net profit (CNP) of RM23.9m came in above expectations, representing 113% and 118% of our and consensus estimates respectively. The outperformance was primarily attributable to stronger-than-expected execution in the EPCC division, mainly driven by revenue recognition in CGPP projects and robust growth in C&I projects.
QoQ. CNP surged by 47.6%, driven by stronger contributions from the EPCC division (PBT +32.7%) and the Others division (PBT +320.5%). The EPCC segment’s performance was driven by greater progresses from CGPP-related EPCC projects, a trend likely to be sustained into FY26F. There was also growing demand for C&I rooftop installations, which we believe is due to the recent 14.2% electricity tariff hike announced for the upcoming RP4 (2025-2027), and ongoing policy support from NEM3.0 and CREAM initiatives. The surge in the others division was likely due to increased REC trading activities, higher demand for environmental solutions, and recent acquisition of 30% stake in Kee Ming Electrical Sdn Bhd on 10 Feb 2025. Despite these, CNP margin declined to 10.6% from 12%, mainly attributable to a larger revenue contribution from lower-margin CGPP EPCC projects. This is evident by 7.4%-pts drop in PBT margin of the EPCC segment.
YoY. CNP rose 135.2%, primarily driven by strong progress from CGPP projects and reduced contribution from lower-margin LSS4 projects nearing completion under the EPCC division. Consequently, CNP margin improved slightly from 10.5% to 10.6%.
Outlook. We expect sustained qoq improvement in earnings, supported by accelerated growth phase of s-curve for the CGPP EPCC projects. Though these projects have an 18-month execution window, we think earlier delivery to avoid late penalties based on historical track record. Near-term order book replenishment is expected to be driven by LSS5, which typically materialises within 6 months of project developer appointment. Solarvest has secured a 26.5% market share in LSS5 EPCC awards, on track to capture ~30% on the back of recent 500MWac contract wins from TNB, showcasing its strength in large-scale projects. Additionally, with solar module prices declining post-April peak, lower installation costs should accelerate project pipeline conversion, reinforcing Solarvest’s strong order replenishment momentum. As of 31 Mar 2025, Solarvest’s unbilled order book stands at RM1.2bn (41% from LSS, 39% from CGPP, and the remainder from C&I) equivalent to 2.3x its FY25 revenue.
Earnings revision. Post-results, we maintained our order book assumptions for the solar division at RM2.2bn for FY26F, supported by a favourable government energy transition outlook. We have yet to factor in any potential contributions from BESS project wins. We have also adjusted our earnings recognition for CGPP projects, expecting Solarvest to complete them ahead of schedule. Consequently, we have raised our FY26F earnings forecast by 11.5%. We also introduced our FY27F CNP forecast at RM93.5m.
Valuation. After rolling over our valuation base year to FY27F, we maintain a BUY rating with a higher TP of RM2.61 (previously RM2.03), based on a SOP valuation and a three-star ESG rating. We believe Solarvest is well-positioned to capitalise on government renewable energy initiatives, thanks to its unique in-house solar financing and its position as Malaysia’s largest solar EPCC player.
Risks. Increase in solar module costs. Heavy reliance on government initiatives. Intense market competition.
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Currency | Buy Rates (RM) | Sell Rates (RM) |
---|---|---|
USD | 4.214000 | 4.246402 |
EUR | 4.933065 | 4.941517 |
CNY | 0.592554 | 0.593580 |
HKD | 0.540322 | 0.544498 |
SGD | 3.273088 | 3.298512 |