Solarvest Holdings Berhad - Acquires 22% Stake in SDCG
Wed, 24-Dec-2025 07:26 am
by Tan Sue Wen • Apex Research

Counter

SLVEST (0215)

Target Price (RM)

3.57

Recommendation

Buy

  • SLVEST has acquired a 22.0% stake in Solar District Cooling Group Berhad (SDCG) for RM42.0m, via a direct business transaction.

  • The acquisition implies a PE valuation of c.36.6x, which we view as fair. While the implied multiple is high, SDCG’s share price has not traded below RM0.45 since listing, suggesting strong market confidence in its growth prospects and long-term outlook.

  • Maintain BUY with a revised target price of RM3.57, based on a sum-of-parts (SOP) valuation and supported by a three-star ESG rating.

 

RM42m for 22% stake in SDCG. SLVEST entered into a Share Sale Agreement (SSA) to acquire a 22.0% equity stake in Solar District Cooling Group Berhad (SDCG) for a cash consideration of RM42.0m, equivalent to RM0.45/share. SDCG, an ACE Market-listed company, is principally involved in the provision and maintenance of building management systems (BMS), solar thermal systems, and energy-saving and mechanical and electrical services. The acquisition was completed on 23 Dec 2025 and funded entirely via internally generated funds. Following the acquisition, SLVEST becomes a substantial shareholder of SDCG, which will be accounted for as an associate.

 

Table 1: Historical Financial Performance and Valuation of SDCG

FYE Dec (RM'm)

FY22

FY23

FY24

9MFY25

Revenue

18.6

26.6

25.3

18.2

Gross profit

10.7

14.4

14.0

9.8

PBT

6.5

8.7

5.9

4.6

PAT

5.2

6.3

4.3

3.9

     
GP Margin

57.3%

53.9%

55.1%

54.0%

PAT Margin

27.9%

23.8%

16.9%

21.5%

P/E (x)

36.7

30.1

44.5

36.6x*

*Based on annualised 9MFY25 PAT of RM5.2m and implied equity value of RM191m

Source: Company, Apex Securities

 

Our Take. Based on SDCG’s annualised 9MFY25 PAT of RM5.2m, SLVEST’s acquisition of a 22.0% stake implies a P/E valuation of c.36.6x, which we view as fair. While the implied P/E is high, SDCG’s share price has not traded below RM0.45 since listing, suggesting market confidence in its growth prospects and long-term outlook. In addition, the purchase consideration represents a 22.4% discount to the five-day VWAP. Strategically, the acquisition supports technology integration and customer mapping, which is expected to enhance cross-selling opportunities and deepen engagement with existing and new customers. The investment also benefits from BMS-driven recurring and project-based income, including government and data centre-related projects, which supports medium-term earnings visibility.

 

Earnings revision. We have raised our FY25F/FY26F earnings forecasts by 0.2%/0.5%, respectively, to reflect the equity-accounted contribution from the 22% associate stake, assuming gradual earnings growth over FY25F-FY26F.

 

Valuation. Maintain a BUY rating on SLVEST with a revised TP of RM3.57 (from RM3.55), after factoring in the 22% stake in SDCG, based on a SOP valuation and supported by 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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