SLVEST: Strategic Alliance Bolsters Renewable Energy Outlook, Target Price Revised Upwards
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
AmInvestment Bank has maintained its “HOLD” rating on Solarvest Holdings but has revised its target price upwards to RM2.40 per share from the previous RM2.12. This adjustment reflects a more positive outlook driven by strategic partnerships and an robust pipeline of renewable energy projects.
Performance Drivers
The revised target price is underpinned by an anticipated stronger Engineering, Procurement, Construction, and Commissioning (EPCC) order book and growing recurring income streams from electricity sales. AmInvestment Bank has consequently raised its net profit forecasts, with FY26F net profit increasing by 3.5% and FY27F net earnings by 16.8%.
Strategic Collaboration Fuels Growth
A pivotal development highlighted in the report is Solarvest’s Joint Investment Framework Agreement with Brookfield CTF Asia Holdings. This collaboration is set to govern the development of CRESS (Corporate Green Electricity Programme) solar projects, with a cumulative capacity target of at least 1,500MWp. For each identified project, a Special Purpose Vehicle (SPV) will be established, with Solarvest holding a 51% stake and Brookfield 49%. This structure allows Solarvest to expand its ownership of renewable energy assets without over-leveraging its balance sheet.
Under the terms of the agreement, Brookfield will play a crucial role in securing financing and identifying off-takers for the renewable energy generated. Solarvest, in turn, will be granted preferred rights as the turnkey EPCC contractor for these significant projects.
Robust Order Book and Future Outlook
The potential EPCC order book from the 1,500MWp CRESS projects is estimated to be approximately RM2.7 billion over five years, translating to an average annual order book of RM536 million. This substantial pipeline is expected to provide significant revenue visibility.
As of end-June 2025, Solarvest’s unbilled order book stood at RM1.2 billion. This includes a diverse portfolio, with 42.6% from Large Scale Solar (LSS 5) projects, 35% from Corporate Green Power Programme (CGPP) projects, and the remaining 22.4% from residential, commercial, and industrial installations. Beyond EPCC work, the company benefits from recurring income from its 67.3MWp LSS 4 assets, with further growth anticipated from the upcoming commissioning of CGPP assets later this year, which will increase its effective interest to 71MWp of CGPP assets.
Key Considerations
Despite these positive developments, the investment bank noted that the recent surge in Solarvest’s share price might have already incorporated the news of the Brookfield collaboration. Furthermore, the rising cost of solar panels was cited as a contributing factor in maintaining the “HOLD” recommendation, suggesting potential margin pressures or increased capital expenditure in the future.
