KUALA LUMPUR (Oct 20): Maybank Investment Bank Bhd is the most bullish among 12 analysts surveyed by Bloomberg covering Solarvest Holdings Bhd (KL:SLVEST), citing the group's track record of bagging 30% of Malaysia's current solar jobs as another RM20-RM25 billion in contracts are in the pipeline.
The research house maintains its "buy" call on the stock and increased the target price to RM5.68 (previously RM4.31), almost a ringgit more than the average RM4.57 among analysts covering the stock.
Maybank IB expects Solarvest to be a key beneficiary from the demand for builders as projects under the Corporate Renewably Energy Supply Scheme (CRESS) and the sixth Large Scale Solar programme (LSS6) take off between 2027 and 2029.
The company aims to start projects with a combined generating capacity of between 300 megawatts (MW) and 500MW in its financial year ending 2027 (FY2027), mainly under CRESS, followed by job replenishments under CRESS and LSS6 in the next two financial years to maintain its market share of 30%, said the research house.
Consequently, Maybank IB raises its forecast for Solarvest's new contract wins in FY2028 to RM2.8 billion from RM1.6 billion previously, and also raised its earnings forecasts for FY2027 to FY2029 by between 1% and 30%.
The research house remains positive about the sector despite a recent increase in grid charges under CRESS, which is a fee to route renewable energy via the national power grid from independent producers to corporate customers.
The Energy Commission recently introducing an additional four sen per kilowatt-hour (kWh) charge for green electricity consumers, bringing the combined system access charge (SAC) to 18 sen/kWh, but Maybank IB says it is unlikely to have a major effect on demand for renewable energy projects, as the revised rate remains below the originally proposed 20 sen/kWh.
“Most pipeline projects remain intact, underpinned by DC (data centre) operators’ decarbonisation targets and CRESS’ appeal in providing energy cost savings, and long-term hedge against Tenaga Nasional Bhd (KL:TENAGA) tariff increases,” said Maybank IB.
According to AskEdge data, Solarvest is currently trading at a price-to-earnings ratio of 48.8 times, which is higher than most peers and is at the higher end compared to historical valuation in recent years.
The company’s price-to-net asset value ratio of 4.5 multiples is lower than most peers and below the average from recent years.