Solarvest Holdings Berhad - First Solar PPA Win in East Malaysia
Mon, 06-Oct-2025 07:32 am
by Tan Sue Wen • Apex Research

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SLVEST (0215)

Target Price (RM)

3.41

Recommendation

Buy

  • SLVEST, via a 60:40 joint venture with Press Metal Berhad, has signed a 30-year PPA with SESCO to design, construct, own, operate, and maintain a 100MWac LSS plant in Sarawak, with COD targeted for 30 November 2027.

  • We view the development positively, as it marks SLVEST’s first large-scale solar venture in East Malaysia, strengthening its foothold in the region’s renewable energy landscape.

  • Earnings forecasts are maintained, as contributions from the project are expected to commence in FY28, which lies beyond our forecast horizon.

  • Maintain BUY recommendation with a higher TP of RM3.41 (from RM3.15), based on a SOP valuation and a three-star ESG rating.

 

30-year PPA with SESCO. On 3 October 2025, SLVEST, via its 60%-owned subsidiary Mukah Solar Powerplant Sdn. Bhd. (MSPSB) signed a 30-year Power Purchase Agreement (PPA) with Syarikat SESCO Berhad (SESCO) to design, construct, own, operate, and maintain a 100MWac solar photovoltaic facility in Mukah, Sarawak. MSPSB is a JV between Solarvest Asset Management (Borneo) Sdn. Bhd and Press Metal Berhad, with equity stakes of 60% and 40%, respectively. The PPA governs the sale and purchase of the net electrical output generated by the facility and delivered to SESCO. The commercial operation date (COD) is targeted for 30 November 2027, with a total estimated investment cost of RM380m.

 

Our take. We view the development positively, as it marks SLVEST’s first large-scale solar venture in East Malaysia. The project’s estimated capex of RM3.8m per MWac is notably higher than the c.RM2.5m per MWac typically seen in Peninsular Malaysia, which we attribute to elevated logistics and infrastructure costs. While Sarawak’s generation system is predominantly hydro-based with low marginal costs, which may reduce SESCO’s incentive to offer higher solar tariffs, we believe project returns remain manageable. The impact is partly mitigated by lower financing costs given SESCO’s strong offtaker profile, and the longer 30-year PPA tenure (vs. 21 years under LSS schemes), which enhances project bankability. Assuming an 80:20 debt-to-equity structure and dispatch tariffs of 14-16 sen/kWh (in line with LSS5 benchmarks), the project is expected to yield a mid–single-digit IRR. As of 30 June 2025, SLVEST still had RM830m in unused sukuk issuance capacity, and we do not foresee major hurdles in securing project financing.

 

Outlook. We view this first solar win in East Malaysia as a strategic entry that strengthens SLVEST’s regional presence and positions it for future EPCC opportunities. The Group targets to lift recurring income to 30% of revenue by FY27 (from 5.6% in 1QFY26) under its five-year roadmap, with solar farm development remaining the key growth driver toward its 1GWac ownership goal (currently ~380MWac). Assuming RM45.6m is allocated for the 100MWac Mukah project, SLVEST would still have about RM784.4m available under its Sukuk Wakalah Programme. Combined with its 51:49 partnership with Brookfield Catalytic Transition Fund via a special purpose vehicle, this headroom could fund up to 3.5GWac of new solar projects (c.RM7.7bn in investment value) in peninsular Malaysia, supporting its asset-growth targets. Meanwhile, results from the MyBeST programme (tender closed July 2025) are expected in 2H25, where SLVEST remains a strong contender given its execution record, financing strength, and in-house asset management capability.

 

Earnings revision. Earnings forecasts are maintained, as contributions from the asset are expected to commence in FY28, which is outside the forecast period. 

 

Valuation. Maintain our BUY recommendation with a higher TP of RM3.41 (from RM3.15)incorporating SLVEST’s 60% stake in the 100MWac 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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