SLVEST, via a 20:80 JV with MALAKOF, has received a Letter of Notification from the EC to develop a 470MWac LSS plant in Perak under LSS PETRA 5+, with COD expected between 2027-2028.
We view this PPA positively, as it marks SLVEST's first sizable utility-scale solar asset in Malaysia outside its Powervest programme, providing a new recurring income stream and reinforcing its long-term growth profile.
We make no changes to our earnings forecast, as contributions are expected to begin in FY28, which is outside the current forecast period.
Maintain BUY recommendation with a higher TP of RM2.71 (from RM2.61), incorporating SLVEST’s 20% stake in the 470MWac solar project into our SOP valuation.
Secures 470MWac PPA. On 2 Sept 2025, SLVEST, via a consortium with Malakoff Corporation Bhd (MALAKOF), received a Letter of Notification from the Energy Commission of Malaysia to develop a 470MWac large-scale solar photovoltaic (LSS) plant in Larut & Matang, Perak, under the LSS PETRA 5+ programme. The project will be undertaken through a special purpose vehicle (SPV), which will sign a 21-year solar power purchase agreement (SPPA) with TNB. The consortium is structured with MALAKOF holding an 80% stake and SLVEST 20%. The COD is expected between 2027 and 2028, in line with the EC’s rollout schedule.
Our take. We view the development positively, as it marks SLVEST’s first sizable utility-scale solar asset in Malaysia outside its Powerwest programme, providing the Group with an additional source of recurring income. Applying a rule of thumb of RM2.2m/MWac based on solar module prices of USD0.09/watt, the estimated capex for the 470MWac plant is c.RM1bn. Assuming an 80:20 debt-to-equity financing structure, and dispatch tariffs of 13-16 sen/kWh (industry estimates), the project is expected to generate a mid-single-digit IRR. We estimate contribution to SLVEST at ~RM4m/year in PATMI. As of 30 June 2025, SLVEST still had RM830m in unused sukuk issuance capacity, and we do not foresee any major hurdles in securing project financing.
Outlook. We view this PPA positively, as it aligns with SLVEST’s medium term goal of raising recurring income to 30% of annual revenue (5.6% as of 3MFY26), as outlined in its 5-year strategic roadmap. To achieve the 1GWac RE assets target (from the current c.300MWac effective stake), solar farms will remain a key growth driver. Importantly, the recent reduction in the SAC makes solar offtake more competitive relative to the Green Electricity Tariff (GET), enhancing the attractiveness of solar investments for own consumption, particularly among corporates seeking to offset carbon emissions. This is expected to spur CRESS uptake, thereby providing an additional tailwind for SLVEST’s expansion. From a financing perspective, assuming RM165m is allocated for the 470MWac plant, SLVEST would still have RM665m available under its Sukuk Wakalah Programme. This balance could fund up to c.300MWac of solar farm projects, underscoring achievability of its 1GW target. We believe SLVEST will most likely be the EPCC contractor for the job, given the 20% stake in the asset.
Earnings revision. The earnings forecasts are maintained, as the expected EPCC job win of c.RM950m falls within our FY26F orderbook replenishment assumption of RM2bn, and contributions from LSS5+ are expected to begin in FY28, which is outside the forecast period.
Valuation. Maintain our BUY recommendation with a higher TP of RM2.71 (from RM2.61), incorporating SLVEST’s 20% stake in the 470MWac solar project into our SOP valuation, alongside 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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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.212894 | 4.246402 |
| EUR | 4.925348 | 4.934954 |
| CNY | 0.592662 | 0.593823 |
| HKD | 0.542079 | 0.546393 |
| SGD | 3.250847 | 3.276896 |