KUALA LUMPUR (Dec 16): Securing Google as the offtaker for Solarvest Holdings Bhd's (KL:SLVEST) 33%-owned solar power plant secures the group's credential for future bids, said analysts.
Kenanga Research noted that the track record of supplying power to Google also accrues to Solarvest, which was also earlier tasked with undertaking the engineering, procurement, construction and commissioning (EPCC) portion of the Gurun power plant.
"This being Google’s first inaugural power purchase agreement under Malaysia's Corporate Green Power Programme (CGPP) augurs well for Solarvest to collaborate actively ahead, including under Corporate Renewable Energy Supply Scheme (CRESS) bids, particularly for data centre build-out requiring green energy," the house said in a note. On Monday, Shizen Energy Group, the lead developer, announced that Google would be purchasing power from the 29.99MW solar plant.
The Japanese renewable energy group owns 49% of the plant, alongside Solarvest and HSS Engineers Bhd (KL:HSSEB) with an 18% stake.
Separately, Solarvest via 49%-owned Binastra Atlantic Sdn Bhd won an LSS5 EPCC job worth RM171.1 million.
Following the latest win, Solarvest’s outstanding order book is estimated at about RM1.7 billion, equivalent to nearly four times its EPCC revenue for the financial year ended March 31, 2025 (FY2025).
Looking ahead, analysts expect Solarvest to continue securing new EPCC contracts in FY2026, underpinned by fifth large-scale solar or LSS5, LSS5+ and CGPP project roll-outs.
“EPCC contract finalisation for its 20%-owned 470MWac LSS5+ project with Malakoff Corp Bhd (KL:MALAKOF) could lift the group’s order book to RM2.5 billion as pending awards are concluded,” added Maybank Investment Bank in a separate note.
Kenanga maintained its 'outperform' call with a target price of RM3.45, while Maybank IB reiterated its 'buy' recommendation with a higher target price of RM3.67, citing Solarvest’s dominant market position and strong exposure to Malaysia’s energy transition.
Kenanga employs 30 times price-earnings ratio on Solarvest's FY2027 earnings for EPCC work, while for the manufacturing business, it pegs valuations of 10 to 16 times earnings.
Further, the research house said there is upside to its TP from CRESS earnings under the Brookfield joint venture.
"We have yet to impute into our EPCC earnings forecasts — by fully incorporating earnings from the Brookfield [joint venture] from FY2028 into our solar EPCC forecasts (to reflect a full financial year), our target price could be uplifted by [about] RM1," it added.