Solarvest Holdings Berhad - First solar PPA in Brunei
Tue, 17-Jun-2025 07:47 am
by Tan Sue Wen • Apex Research

Counter

SLVEST (0215)

Target Price (RM)

2.61

Recommendation

Buy

  • SLVEST’s 34%-owned JV company, SSPSB has signed a 25-year PPA with the Government of Brunei Darussalam to invest, build, and operate a 30MWac solar power plant.

  • We view this PPA positively, as it marks SLVEST’s first utility scale PPA in Brunei, enabling the Group to secure recurring income while establishing a foothold in a new regional market.

  • We make no changes to our earnings forecast for now, pending fulfilment of conditions precedent in the PPA. Assuming COD by end-2026, the solar farm is expected to contribute c.0.3% and c.1.0% to our FY26F and FY27F earnings forecasts, respectively.

  • Maintain BUY recommendation with an unchanged target price of RM2.61, based on a SOP valuation, and appraised with a three-star ESG rating.

 

Secures 30MWac PPA. On 14 June, Solarvest Holdings Bhd (SLVEST), via its 34%-owned joint venture (JV) company, Seri Suria Power (B) Sdn. Bhd. (SSPSB), signed a 25-year PPA with the Government of Brunei to invest, build, and operate a 30MWac solar power plant in Kampong Belimbing, Brunei. The plant is set to break ground in 3QCY25, with COD anticipated by end-2026. SSPSB is jointly owned by Atlantic Blue Sdn. Bhd. (34% stake, a wholly-owned subsidiary of SLVEST), Khazanah Satu Sdn. Bhd. (30% stake, a Brunei government-linked investment agency), and Serikandi Oilfield Services Sdn. Bhd. (36% stake, a private Bruneian entity involved in energy, offshore services, and other infrastructure-related businesses).

 

Our take. We view the development positively, as it marks SLVEST’s first utility scale PPA in Brunei, providing the Group with additional source of recurring income while establishing a strategic foothold in a new regional market. Our preliminary calculations suggest a minimal impact on our FY26F CNP forecast. Assuming a CAPEX of USD0.6m/MWac, a tariff rate of USD0.08/kWh, an 80:20 debt-to-equity financing structure, and a double-digit IRR, we estimate the project will generate c.RM0.5m-1.5m annually in PATMI for the Group, representing c.1.0% of FY27F CNP. Given SLVEST’s gearing ratio was 0.57x as of 31 Mar 2025, we do not foresee any major challenges in securing financing. Notably, this will be Brunei’s first large-scale solar plant under a public–private partnership and is set to become the country’s largest solar installation. Brunei’s installed solar capacity stood at just 5MW at end-2024, accounting for only 0.6% of its c.904MW total installed capacity. With a national target to achieve 30% RE capacity mix by 2035, the PPA could serve as a stepping stone for SLVEST’s broader expansion in Brunei’s RE sector.

 

Outlook. SLVEST aims to increase recurring income to 30% of annual revenue (up from 10% in 12MFY25), as outlined its five-year strategic roadmap. The recent PPA win in Brunei strengthens the Group’s trajectory towards achieving 1GWac solar asset target (from ~300 MWac currently), while supporting its objective to expand recurring income stream. Brunei offers long-term regional growth potential beyond the Malaysia market. Over the near term, growth is expected to be supported by the LSS5+ programme, despite its compressed bid submission timeline. With RM950m available under the Sukuk Wakalah Programme, sufficient to finance up to 400MWac of solar farm projects (assuming leased land), we believe SLVEST remains well-positioned to expand its solar farm portfolio and deliver on its medium-term growth target.

 

Earnings revision. We make no changes to our earnings forecast for now, pending fulfilment of conditions precedent in the PPA. Assuming COD by end-2026, the solar farm is expected to contribute c.0.3% and c.1.0% to our FY26F and FY27F earnings forecasts, respectively.

 

Valuation. Maintain our BUY recommendation with an unchanged TP of RM2.61 based on a SOP valuation and a three-star ESG rating. We believe SLVEST 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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