Solarvest Holdings Berhad - Within Expectations
Thu, 20-Nov-2025 08:42 am
by Tan Sue Wen • Apex Research

Counter

SLVEST (0215)

Target Price (RM)

3.550

Recommendation

Buy

  • SLVEST’s 2QFY26 CNP of RM20.3m (+20.0% QoQ, +125.1% YoY) came in within expectations, bringing 6MFY26 CNP to RM37.2m (43% of our forecast; 49% of consensus). We deem the results broadly in line as we expect a stronger 2HFY26 driven by higher billings from CGPP EPCC works.

  • Near-term order book replenishment will likely be supported by LSS5+, as EPCC contracts are typically awarded six to nine months after financial close. YTD, SLVEST has secured c.27% market share in LSS5 and 24% in LSS5+.

  • Maintain a BUY recommendation with an unchanged TP of RM3.55, based on a SOP valuation and a three-star ESG rating.

 

Within expectations.After adjusting for forex losses (+RM1.5m), SLVEST’s 2QFY26 core net profit (CNP) is estimated at RM20.3m, bringing 6MFY26 CNP to RM37.2m. This represents 43% of our full-year forecast and 49% of consensus. While the results came in below our expectations, we deem them broadly within range as we anticipate a stronger 2HFY26, driven by higher billings from CGPP EPCC works and the commencement of LSS5 project.

 

QoQ. CNP increased by 20.0%, primarily driven by CGPP EPCC jobs progressing into accelerated revenue-recognition phases, in line with the EPCC segment’s revenue growth of +4.7%. We also note that segmental PBT margins expanded by 2.3%-pts to 12.8%, which we attribute to favourable FX movements (average USD/MYR of 4.31 in 2QFY26 vs 4.33 in 1QFY26, representing ~1% appreciation of the MYR) that lowered imported solar panel and inverter costs, as well as a more favourable product mix supported by front-loaded C&I demand under the SELCO programme ahead of mandatory BESS after December 2025. Meanwhile, the “Others” segment continued to register an LBT of RM0.7m due to softer environmental commodities trading.

 

YoY. CNP surged by 125.1%, driven by (i) stronger progress on ongoing CGPP projects, compared to 2QFY25 when most LSS4 projects were approaching the tail end with thinner margins; (ii) higher contributions from associates and joint ventures, supported by incremental contributions from acquisitions of SIW and KMESB; and (iii) stronger power generation income from LSS4 plants and Powervest solar assets, which have ramped up to more stable operating levels. In addition, favourable FX movements helped lower imported panel and inverter costs, further lifting margins. As a result, core margin improved by 3.3%-pts to 12.0%.

 

Outlook. We expect SLVEST to continue delivering robust results in the coming quarters, supported by the accelerated execution of its CGPP projects and the LSS5 pipeline, which is scheduled to achieve COD between end-2027 and 2028. Near-term order book replenishment will likely come from LSS5+, as EPCC contracts are typically awarded six to nine months after financial close. We remain confident that SLVEST will sustain its strong position in the LSS segment, underpinned by its 27% market share in LSS5, 24% in LSS5+, and its solid balance sheet. Recent project wins of about 100MW in East Malaysia further strengthen its regional presence and align with Sarawak’s targets to expand renewable energy capacity to 10GW by 2030 and 15GW by 2035, up from 5.8GW currently. We believe this win provides a strong reference point that will enhance SLVEST’s tender competitiveness and support higher win rates across East Malaysia. Meanwhile, module prices have experienced short-term fluctuations following China’s tightened energy-intensity controls, which affected production schedules across parts of the supply chain. Nevertheless, we expect the impact on fixed-cost EPCC arrangements to remain manageable, supported by ongoing industry consolidation and the weakening USD, with panel prices holding at around USD0.09/W.

 

Order book.As of 30 Sept 2025, SLVEST’s unbilled order book stood at RM1.3bn (83% utility; 17% C&I and residential), equivalent to 2.5x its FY25 revenue.

 

Earnings revision. No change to our earnings forecasts.

 

Valuation. Maintain a BUY rating on SLVEST with an unchanged TP of RM3.55, 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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