PETALING JAYA: Potential contract wins and existing projects in the pipeline are expected to support Solarvest Holdings Bhd’s earnings growth in the quarters ahead.
RHB Research said the solar turnkey engineering, procurement, construction and commissioning (EPCC) services provider’s growing asset portfolio will provide recurring income for the group.
Solarvest has an overall tenderbook of 2.5 gigawatt (GW) capacity encompassing developer and EPCC contracts.
“The 2.5GW tenderbook reflects the growing demand for solar energy, which should benefit the group by providing replenishment opportunities as well as scaling up its regional presence.
“Moreover, we have seen many policy shifts by the government in its journey to increase renewable energy (RE) adoption,” the research house said in a report yesterday.Solarvest’s order book stands at RM550mil, with a 62:38 split between large scale solar (LSS) and commercial and industrial, as of the financial year 2023 (FY23).
“As per management’s guidance, FY24’s revenue will be anchored by the RM344mil LSS4 jobs – with all eight projects targeted for completion by December 2023.
“For its own LSS4 assets, two projects are to be commissioned by the second quarter of 2024 (2Q24) and one by 3Q24. Upon completion, the projects would contribute about RM7mil to RM10mil to net profit per annum,” the research house said.
RHB Research noted that Solarvest secured about 74.5 megawatt peak (MWp) of corporate power purchase agreements, which would provide recurring earnings for the company.
Regarding the group’s 2.5GW tenderbook, the research house added that the group is making progress in Taiwan with its current tender of about 516MWp capacity, even though 70.6% of the tender is for domestic jobs.
“Other tenders include those in the Philippines (about 126MWp), Vietnam (about 55MWp), Singapore (about 15MWp), Indonesia (5.7MWp) and Thailand (about 18MWp). It is looking to convert a few of the tenders into its FY24 order book.
“As for the Corporate Green Power Programme, Solarvest has tendered for 467MWp of quota to replace the soon-to-be-depleted LSS4 orders and provide cover for FY25,” RHB Research said.
Singapore’s lifting of the RE export ban recently will also bode well for Solarvest given that the country offers a high demand market.
“Singapore’s higher household electricity tariff will potentially provide higher gross margin as well as incentivise RE players to explore battery energy storage system projects,” RHB Research said.
RHB Research maintained a “buy” call on Solarvest with a target price of RM1.28