PETALING JAYA: RHB Research believes the market’s anxiety over the solar panel issue, namely, China’s move to remove export value-added tax (VAT) rebates, has been overdone.
As such, it highlighted that Solarvest Holdings Bhd
’s fundamentals and earnings trajectory remain intact.
RHB Research has maintained its “buy” call with an unchanged target price of RM3.49, implying 44% upside from the prevailing RM2.42 share price after what it described as a steep correction.
At the centre of the uncertainty is China’s policy shift. From April, China will remove the 9% export VAT rebate on solar panels and reduce the rebate on batteries from 9% to 6%, with full removal by January 2027.
RHB Research expects this to translate into a 9% increase in panel prices after April. This is what has triggered concern over project margins and execution risk across the sector.
However, the research house believes that Solarvest is relatively insulated.
The company has secured a two GW blanket panel order at a fixed price for the next 18 to 24 months. This is supported by a dual-deposit structure where Solarvest and its supplier post 10% deposits. This provides meaningful cost visibility, particularly for near-term projects.
Importantly, RHB Research noted the blanket orders are more than sufficient and that certain large projects such as the large-scale solar five (LSS5), LSS5+ and Mukah are not affected, as panel procurement for some projects is handled by the project owner.
The key fear in the market has been whether suppliers might default if spot prices rise sharply above contracted levels.
RHB Research acknowledged spot panel prices have risen to around US$0.10 to US$0.11 per watt from contracted levels of roughly US$0.09 per watt. It said this could potentially move towards US$0.12 to US$0.13 per watt after April.
It believes that outright default is unlikely because Solarvest’s suppliers are described as top-tier, China-listed manufacturers with long operating track records, and reputational and legal risks would outweigh the short-term gain.
If execution risk emerges, RHB Research expects it would more likely take the form of shipment delays or rescheduling, rather than contract breaches.
It also saw limited further upside in panel prices beyond the VAT-driven increase, pointing to stable polysilicon prices of US$7 to US$8 per kg, which it identifies as the key determinant of module pricing.
Meanwhile, the ringgit’s 3.2% appreciation against the yuan (as at Feb 3) provided an additional cushion, since procurement is settled in yuan .
Overall, RHB Research said the VAT shift has negligible impact on Solarvest’s earnings forecasts, and that the stock is now trading at its three-year historical price earnings multiples mean of 23 times, which it views as a valuation floor.
