Solarvest Holdings Berhad - Growth Momentum Remains Intact
Wed, 17-Sep-2025 08:24 am
by Tan Sue Wen • Apex Research

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SLVEST (0215)

Target Price (RM)

3.15

Recommendation

Buy

  • Near-term order replenishment is expected from additional LSS5 and LSS5+ contracts, with job flow anticipated to commence post six-month financial close. SLVEST is targeting a minimum 30% market share in each programme and has already secured 26.5% and 23.5% for LSS5 and LSS5+ respectively.

  • Management remains confident of securing a further c.RM1bn in LSS contracts, which would lift its order book to ~RM3bn by end-CY2025.

  • Earnings forecasts have been revised upward by 18.9% and 31.5% for FY26F and FY27F respectively, following higher order book assumptions supported by the favourable government energy transition outlook and an expected uplift from CRESS after the reduction in SAC.

  • Maintain BUY recommendation with a higher TP of RM3.15 (from RM2.71), based on a SOP valuation framework and a three-star ESG rating.

 

Earnings Momentum Remains Resilient. FY26 earnings momentum is expected to remain strong, driven by (i) accelerated revenue recognition from CGPP projects, where about one-third of progress has already been delivered, (ii) progressive recognition of RM504m LSS5 contracts from 4QFY26 onwards, and (iii) steady contributions of c.RM50m per quarter from rooftop solar projects, supported by front-loaded demand under SELCO ahead of the 31 December 2025 BESS integration deadline and the introduction of the ATAP programme. In addition, earnings will be reinforced by recurring income from electricity sales, notably from 129MWp of Powervest solar assets and initial COD contributions from 70.7MWp of CGPP assets, which provide a growing base of predictable cash flows.

 

Order book Visibility Remains Robust.  Pro forma order book is estimated at c.RM2.6bn (4.9x FY25 revenue) after factoring in the recent 470MWac LSS5+ win via a consortium with Malakoff, assuming EPCC jobs are awarded to SLVEST. Near-term replenishment is expected from additional LSS5 and LSS5+ contracts, with job flow anticipated to commence post six-month financial close. SLVEST is targeting a minimum 30% market share in each programme and has already secured 26.5% and 23.5% for LSS5 and LSS5+ respectively. Management remains confident of securing a further c.RM1bn in LSS contracts, which would lift the order book to ~RM3bn by end-CY2025. We believe momentum will also be supported by the uptake of CRESS, underpinned by the recent reduction in system access charges (SAC) to 5 sen/kWh for firm supply and 20-40 sen/kWh for non-firm supply, alongside a 47% decline in battery costs from their peak to c.USD160/kWh. These developments enhance project economics, particularly for data centre operators, where the new UHV tariff category has raised electricity costs by c.26%. Additional upside could come from the MyBeST programme, where SLVEST has been shortlisted for 400MW/1,600MWh capacity and each project carries an estimated EPCC contract value of c.RM500m. Beyond this, the tender book remains sizeable at ~8.1GWp of solar projects and ~882MWh of BESS, providing long-term replenishment visibility.

 

Expanding Presence Internationally. Beyond Malaysia, SLVEST is also expanding regionally, with Brunei as a key entry point. In Brunei, SLVEST participates via a 49%-owned joint venture expected to deliver c.RM100m of EPCC works, with contributions recognised through associates. In addition, it holds a 34% equity stake in project ownership, leveraging the recently introduced Powervest programme to establish a foothold in the asset ownership space. We remain confident that SLVEST is well positioned to replicate its successful model of combining EPCC execution with asset ownership in regional markets. 

 

Module Pricing Outlook Remains Manageable.  With China’s recent anti-involution policy pushing up upstream silicon input costs, module ASPs are expected to edge toward USD0.10/W and could stabilise at around USD0.11/W. According to the International Energy Agency (IEA), current global solar manufacturing capacity is sufficient to cover global demand through 2030. This structural surplus should keep module prices contained in the medium term. For LSS5, SLVEST is relatively insulated as most contracts are secured with procurement largely excluded from its scope, leaving the Group focused on execution. CRESS margins remain more exposed under the current SAC framework, although improved economics from lower system access charges and a decline in battery costs provide some offsets.

 

Earnings revision. We have raised our order book assumption for the solar division in FY26F to RM2.4bn (from RM2.2bn), supported by the favourable government energy transition outlook and an expected uplift from CRESS following the reduction in SAC. For FY27F, we maintain our order book replenishment forecast at RM2.2bn, as we believe most resources will be allocated to executing existing projects. We have also revised our earnings recognition, particularly for LSS5, where we expect SLVEST to commence work ahead of schedule. As a result, our FY26F and FY27F earnings forecasts have been revised upward by 18.9% and 31.5% respectively.

 

Valuation. Maintain our BUY recommendation with a higher TP of RM3.15 (from RM2.71). We have adjusted our applied PE multiple for the EPCC division to 30x (from 35x) to align with valuation benchmarks for the renewable energy solar sector. SLVEST remains well positioned to capitalise on government renewable energy initiatives, supported by its unique in-house solar financing model and its standing 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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