Solarvest’s strong orderbook for EPCC services at circa RM762 million will continue to support growth until FY24

KUCHING: Analysts believe Solarvest Holdings Bhd’s (Solarvest) strong orderbook for its EPCC services at circa RM762 million will continue to support growth until financial year 2024 (FY24).

To note, the research arm of Maybank Investment Bank Bhd (Maybank IB Research) estimated the unbilled orderbook for Solarvest’s engineering, procurement, construction and commissioning (EPCC) services stood at circa RM762 million, or 3.4-fold FY21’s revenue.

“Solarvest has secured a total RM565 million of EPCC contracts to develop the LSS4 projects, while the remaining are rooftop solar for Residential, Commercial and Industrial buildings,” Maybank IB Research gathered.

“Works on these projects are expected to complete by endcurrent year 2023 (CY23).

“Meanwhile, it also expects to increase its capacity for solar photovoltaic (PV) assets by 50 megawatts (MW), from 1MW currently, which will be completed from end-2022 to 2023.

“Upon full commissioning, it will be able to generate an annual net profit of RM8 million.”

Maybank IB Research gathered that management has unveiled its five-year plan focusing on three pillars of growth: to maintain market leadership in solar EPCC services; to focus on renewable asset development (solar, mini-hydro, biogas, biomass) in Malaysia, Philippines, Taiwan, Vietnam and Indonesia; and to venture into new clean energy ecosystems such as energy storage system, green hydrogen, RE certificates and others.

“At this point, no capex target was disclosed, related spending to be dependant on opportunities that arise.”

Overall, Maybank IB Research kept its earnings forecasts for FY23-24E, with an earnings recovery seen in FY23E, when the majority of Solarvest’s outstanding orderbook is expected to be recognised.

As such, Maybank IB Research’s core net profit for FY23-24E remained at RM30 million and RM34 million, respectively.

“Elsewhere, we understand that the tender for LSS5 is expected to commence soon, which can help keep its orderbook momentum going.

“We believe positive outcome for its 140MW tender in Taiwan would also provide upside potential to earnings.”