PETALING JAYA: TA Research expects Sunview Group Bhd
’s proposed acquisition of a large scale solar four or LSS4 plant in Pahang to enhance the group’s annual earnings by 22% based on its preliminary estimates.
This is assuming an eventual 80:20 debt-to-equity financing structure, the research house said in a note to clients yesterday.
The RM70mil proposed acquisition from PKNP Reneuco Suria Sdn Bhd (PKNPRS) was via a tender exercise.
PKNPRS’ holding company Reneuco Bhd became an affected listed issuer under Practice Note 17 of the Main Market listing requirements in February 2024.
This eventually resulted in halting work on the solar plant and placing it under receivership.
TA Research said: “The acquisition would stretch Sunview’s balance sheet, which will likely require drawing down additional borrowings to fund the purchase as at end of financial year 2025.”
Sunview’s gross cash stood at RM55mil (net gearing: 70%), relative to the RM70mil purchase consideration and additional funds required to complete the construction of the plant.
It noted the acquisition is consistent with Sunview’s strategy of expanding its renewable energy generation assets and grow its recurring income base.
“Depending on the final total capital expenditure for the plant (estimated between RM130mil and RM150mil), we estimate pooled internal rate of return could range between 6% and 8%, which is a decent rate of return for an LSS plant,” the research house added.
Furthermore, as the original engineering, procurement, construction and commissioning contractor, Sunview gained hands-on knowledge of the specific design and technical construction, thus reducing execution risk for the remaining construction phase.
The solar plant is 79% completed with estimated additional funding of between RM50mil and RM120mil required to complete the remaining construction works.
The research house said the proposed acquisition is subject to Sunview’s shareholders’ approval and is expected to be completed by 2Q26.
Pending the completion of the acquisition, TA Research has maintained a “sell” call on Sunview with an unchanged target price of 35 sen per share.
