KUALA LUMPUR (Dec 24): Solarvest Holdings Bhd (KL:SLVEST) appears to have paid a large premium for its latest acquisition that provides a limited near-term boost to earnings, analysts flagged.
Both Maybank Investment Bank and Apex Securities said the price tag is high for a minority stake in Solar District Cooling Group Bhd (KL:SDCG) that values the building management systems company at nearly 37 times its annualised 2025 earnings.
“While there are potential operational synergies” between the two companies, Maybank Investment continued, “the transaction was executed at relatively demanding valuation levels”.
On Tuesday, Solarvest announced that it has bought a 22% stake in ACE Market-listed Solar District for RM41.96 million in cash from managing director Kong Kam Onn and executive director Liuk Ing Hong, who is also Kong’s wife.
The acquisition, involving 93.24 million shares at 45 sen each, is aimed at giving Solarvest a foothold in solar thermal systems and energy-saving services.
Despite the high valuations, shares of Solar District have remained above 45 sen since listing, suggesting market confidence in its growth prospects and long-term outlook, Apex Securities said.
“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 research house said.
The investment also benefits from recurring and project-based income, including government and data centre-related projects, supporting medium-term earnings visibility, the research house added.
Both Maybank Investment and Apex Securities maintained their ‘buy’ calls on Solarvest, in line with the majority of the research houses covering the stock. There is no analyst coverage on Solar District.
Shares of Solarvest were a tad lower at RM3.21 on Wednesday. The stock has rallied some 90% since the start of 2025 amid a wave of energy transition projects in Malaysia that spurred contract wins for the company. Solar District was also down slightly at 58 sen.