Kenanga Research said the acquisition will strengthen Solarvest’s core renewable energy business by expanding its presence in complementary sectors with significant growth potential.
PETALING JAYA: Analysts generally view Solarvest Holdings Bhd
’s latest acquisition of a 30% stake in SIW Manufacturing Sdn Bhd (SMSB) positively.
The solar turnkey engineering, procurement, construction, and commissioning (EPCC) service provider announced earlier this week that it had entered into a share sale agreement with SMSB’s shareholders for the stake acquisition for RM36mil.
SMSB is principally involved in manufacturing waste gas abatement machines and gas system-related modules and components for the semiconductor industry.
RHB Research said SMSB’s guaranteed financial year 2024 (FY24) profit after tax of RM14mil implies a forward price-to-earnings ratio of 8.6 times, which the research house consider reasonable, given the growth potential of environmental, social, and governance or ESG-related businesses
RHB Research said the transaction is projected to raise the group’s FY26 to FY27 earnings by 4% to 5%. The research house also noted the future strategic value to Solarvest can be much greater if the complementary services and cross-selling strategy pan out well. It maintained its earnings projection on Solarvest pending the completion of the transaction.
Kenanga Research, meanwhile, stated the acquisition will strengthen Solarvest’s core renewable energy business by expanding its presence in complementary sectors with significant growth potential.
In an earlier report this week, RHB Research said the group’s prospects will be underpinned by its growing EPCC activity and strong foothold in local and international markets.
RHB Research had also projected Solarvest to deliver a robust three-year core earnings compound annual growth rate of 26%, driven by recurring asset-based earnings and an abundance of contract opportunities.
It maintained a “buy” call on Solarvest with a target price (TP) of RM2 a share. Kenanga Research maintained an “outperform” call on it with a TP of RM1.95 a share.
