Edward Chew, executive director of Northern Solar Holdings (right), and Lew Shoong Kai, managing director
PETALING JAYA: ACE Market-bound Northern Solar Holdings Bhd is confident in its growth and future performance, underpinned by increasing demand and expansion plans as the rooftop solar industry continues to gain traction.
Managing director Lew Shoong Kai (pic) told StarBiz that the potential project value from local demand is significant in the upcoming years till 2027.
Citing an independent market research by Providence, he shared that among the key growth drivers for the demand for engineering, procurement, construction and commissioning services for rooftop energy include the country’s drive for net-zero goals.
He said the government’s direction was “pretty clear” with the implementation of current policies.
His optimism was also backed by the company’s current tender book, which stood at RM1.8bil as of Nov 19, 2024.
Lew said the expected tender success rate is about 15%, based on Northern Solar’s track record, having submitted a total of 387 tenders.
He admitted that there is intense competition in the industry, but it has its strategy mapped out to deal with competition.
“Based on our experience, most of the time we are competing with less than 10 players in the market.
“So, even though you see a couple of hundreds of players, it all depends on how we strategise our plans and how the client chooses its participants,” he said.
The company plans to raise a total of RM42.4mil from the issuance of 67.3 million new shares at an initial public offering price of 63 sen apiece.
About RM29.1mil or 68.8% of the proceeds will be allocated towards working capital.
It will purchase project materials – specifically solar photovoltaic (PV) panels and inverters – and allocate an expected 24 months salary for the recruitment of an additional 20 engineering and business development employees to support its expansion plans.
“Through the proceeds, we will be able to bolster our working capital, aiding the expansion of our solar PV systems business and generate higher earnings,” Lew said.
Meanwhile, a total of RM3.15mil is being put aside for business expansion – of which it will utilise for the establishment of a corporate office and command centre, as well as the establishment of an expanded office in Johor and an additional office in Penang.
“As of now, we are in the midst of identifying suitable premises with a built-up area of 2,000 to 4,000 sq ft in Johor and Penang.”
When asked on whether the group will venture into international markets, Lew said the company is open to opportunities.
However, proper planning is necessary as there are specific aspects to consider, such as regulations and policies.
“But, as you can see, the potential project value in terms of local demand is a lot in the upcoming years.
“So we might take into consideration whether the timing is right for us to go overseas or not,” he said.
As for plans to participate in the latest “talk-of-the-town” project, namely large-scale solar (LSS) projects, he said Northern Solar may consider taking part, but strategising is again necessary.
For instance, he reckoned the self-consumption (Selco) programme offers much opportunity for it to participate in.
The government has removed the 85% demand capacity cap for non-domestic users under the Selco programme, and to allow the installation of solar panels on the ground and over bodies of water.
This comes with guideline changes effective from Jan 1, 2025.
The programme, introduced back in 2017, was previously limited to installation of solar PV systems on rooftops.
At that time, a factory owner can only instal solar panels to cater to 85% of the facility’s electricity demand.
Electricity generated under the Selco programme is generated for own usage and excess is not allowed to be exported to the grid.
“Between a scale of 5 to 15 megawatt, this falls under our capabilities and is actually a scale up from what we are currently doing. It is equivalent to a smaller scale of LSS, so we have so much opportunity and choices from Selco alone.
“And based on our relationship and track record with clients, we can grow faster. We do not have to just limit ourselves to LSS,” he said.
Northern Solar posted a net profit of RM7.43mil in the six months ended Sept 30, 2024, an increase of about 73% year-on-year, on the back of RM40.16mil in revenue. Its net profit margin stood at 18.5%.
