KUALA LUMPUR (June 12): Solarvest Holdings Bhd’s (KL:SLVEST) is expected to rake in revenue of between RM600 million and RM700 million in the financial year ending Dec 31, 2025 (FY2025) on increased overseas contributions, project developer sales and trading of renewable energy certificates (RECs).
Hong Leong Investment Bank (HLIB), citing a recent briefing by Solarvest, said the revenue expectation is between 1% and 18% higher than the research firm’s forecast.
“Our key takeaway from the briefing was management striking a more bullish tone for FY25 gunning for revenue levels of RM600 million-RM700 million.
“The upshift could have originated from: (i) more meaningful contribution from overseas projects and (ii) “others” segment drivers — project developer sales & RECs trading.
“The former is generated through its Powervest platform whereby commissioned capacities are selectively off-loaded while the latter refers to the trading of RECs undertaken by its subsidiary, Saxon Renewables,” it said in a note on Tuesday.
HLIB said while Solarvest’s order book of RM242 million is “thin”, it expects this to inflect from the corporate green power programme (CGPP) pipeline while the commercial and industrial (C&I) market remains robust.
“Projects on hand will contribute financially towards FY25. We think programmes like CGPP and LSS [large solar scale] will sustain its order book growth in coming years,” said the research house.
As such, HLIB has maintained a "buy" call on the counter, with a higher target price of RM1.84, following a raise in Solarvest’s FY2025 (7.4%) and FY2026 (18.5%) earnings forecast.
To recap, Solarvest reported 4QFY2024 results with revenue of RM96.9 million (-13.8% quarter-on-quarter, -14.4% year-on-year) and core profit after taxation and minority interests (Patami) of RM7.7 million (-27.4% quarter-on-quarter, 48.1% year-on-year). This brings FY2024 core Patami to RM32.3illion, increasing by 63.6% year-on-year.
“Results beat our but came within consensus expectations at 107% and 102% of full year forecast respectively. We had earlier expected heavier D&A in 4QFY24 in line with assets,” it added.
Meanwhile, projects on hand will contribute financially towards FY2025, said HLIB, especially with programmes like CGPP and LSS to sustain its order book growth in coming years.
It added that prospects beyond CGPP looks solid, with a multitude of programmes and robust DC pipeline pointing towards strong long-term demand for renewable energy.
“While delays have affected the award timeline, contracts are expected to gradually trickle out within the next three months.
“Management projects billings from CGPP projects starting in 2QFY25 though the bulk of recognition will fall in FY26.
"Barring any EOTs granted, ST has stipulated for CGPP projects to COD by end CY25 (3QFY26) and it anticipates higher urgency on all parties to close the deal.
"We gather that Solarvest’s projects (EPCC & asset-owner) are undergoing financial close/negotiating with off-taker," said HLIB.
The potential order book accretion remains in the RM1 billion range as EPCC costs/MWp remained unchanged.
“We have baked in roughly RM900 million of potential billings. Not short on opportunities. CGPP notwithstanding, prospects remain bright as orderbook growth pipeline beyond CGPP are visible,” it said.
HLIB also cited quotes from LSS5 (2GW), NEM (400MW), LCEG/NEDA (400MW) as key near-term opportunities.
“We understand the company is also working on a mega-scale project — though at this stage, the timeline on further developments is vague.
"To this end, we view the government’s accelerated implementation of Third Party Access (TPA) model from Sept-24 onwards as a key enabler,” it said, adding that the TPA would directly connect RE generators to off-takers by way of grid (wheeling charges), this representing a more market-based approach, resulting in higher returns and attracting more capital.
Shares in Solarvest closed down one sen or 0.6% at RM1.65, valuing the company at RM1.14 billion.