Solarvest Holdings Bhd
Outperform. Target price: RM1.91
SLVEST has proposed to undertake a private placement of 40.2 million new shares, representing up to 6% of its total share base, at an indicative placement price of RM1.41/share.
Net proceeds of RM56 million will be channel towards its Powervest solar financing program (with an installed capacity of about 4MWp), its three solar plants under the CGPP and working capital.
Based on our estimates, the exercise will dilute its FY25F and FY26F EPS by 1% and 2%, respectively, as a 6% increase in its share base is partially mitigated by interest savings of RM2.1 million annually.
The proceeds will reduce its net debt and gearing of RM107.1 million and 0.5x as of end-Q3’24 to RM51.1 million and 0.2x, respectively.
We like SLVEST for: (i) the bright outlook of the RE market in Malaysia, underpinned by the government’s strong commitment towards RE, the export potential of RE and improved commercial viability of solar power projects on falling solar panel prices, (ii) its strong market position, execution track record, clientele and value proposition of its PV system financing programme, and (iii) its strong earnings visibility backed by a sizeable outstanding order and tender books, and recurring incomes from a growing portfolio of solar assets.
We raise our FY25-26F net profit forecasts by 4% and 3% respectively (to reflect the interest savings) but cut our FY25-26F EPS forecasts by 1% and 2% respectively (to factor in the dilution from an enlarged share base).
We fine-tune our TP by 2% to RM1.91 (from RM1.88). Maintain OUTPERFORM.
Risks to our call include: (i) the government dials back on RE policy, (ii) influx of new players in the solar EPCC space, intensifying competition, and (iii) escalation in project costs.