KUALA LUMPUR (Aug 12): Over the near term, Apex Securities anticipates most new job flows for Solarvest Holdings Bhd (KL:SLVEST) to originate from 800MW of corporate green power agreements (CGPAs).
The house in a note on Monday said Solarvest is tendering for over half of this capacity, which could potentially add nearly RM1 billion to its order book.
It noted that currently, the group’s tender book is at 6.1GW, with 66% in Malaysia and 34% regionally.
This includes the upcoming 2.0GW Large Scale Solar 5 (LSS5) and an additional 450.0MW under Net Energy Metering, keeping Solarvest busy until 2028. As of March 31, 2024, the outstanding order book stood at RM242 million.
Apex Securities also said following the recent share price retracement, valuations of Solarvest have become more attractive.
The research firm upgraded its rating to 'buy' for Solarvest, setting a target price of RM1.94 based on sum-of-parts valuation.
Although earnings estimates remain unchanged, the target price has been adjusted to reflect dilution from warrant and employee share option scheme exercises, the house added.
"We favour Solarvest as a front runner poised to benefit from government renewable energy initiatives, and its unique in-house solar financing," the note read. Solarvest is well positioned among renewable energy players to capitalise on long-term growth potential under the National Energy Transition Roadmap.
Just last Friday, Solarvest secured five CGPAs with two global semiconductor leaders and a leading data centre service provider. These agreements collectively amount to the offtake of 59.98MW of solar energy.
Since August 2023, Solarvest has secured three solar assets totalling 89.7MW under three different consortiums. This translates into 43.5MW after factoring in effective stake ownership. The targeted tariff ranges between 25 and 28 sen/kWh, significantly higher than the LSS4 rate of 18 to 20 sen/kWh.
The plants are expected to begin construction promptly to meet the tight commercial operation date deadline set for the end of the financial year ending March 31, 2025.
The estimated capital expenditure for the plants is RM66 million, factoring in the effective stake, which will be finance through a mix of internal funds and equity.
Solarvest had in April proposed a private placement of 6% of its base shares, with up to 50% of the proceeds allocated to its three Corporate Green Power Programme plants.
For the equity portion, Solarvest holds RM51.2 million in net cash, with a gross gearing ratio of 0.23 times (excluding project financing) as of March 31, which remains manageable.
Potential risks to Apex's recommendation include a reversal in solar module costs, heavy reliance on government initiatives, and intense market competition.