SLVEST: Renewable Energy Firm Sees Earnings Soar, Maintains Strong Growth Trajectory
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading renewable energy player has reported an impressive 115% year-on-year surge in core net profit for the first half of FY26, reaching RM37 million. This performance was broadly in line with expectations, primarily driven by robust contributions from Corporate Green Power Programme (CGPP) projects. The company’s revenue also saw a significant increase, growing by 74% year-on-year, propelled by accelerated progress billings from CGPP initiatives. Sequentially, both revenue and core net profit continued their upward trend, rising 23% and 18% respectively, reflecting strong operational momentum and effective project execution.
Performance Review
The company demonstrated stable operational efficiency, with its EBITDA margin holding firm at 20.5%. The substantial growth in core net profit underscores the success of ongoing CGPP projects and the company’s ability to manage costs effectively. This solid financial footing positions the firm well for continued expansion in the rapidly evolving renewable energy sector.
Future Outlook and Growth Drivers
Earnings momentum is anticipated to remain strong, underpinned by a sizeable unbilled order book of RM1.3 billion as of September 2025. This order book, largely comprising CGPP and Large-Scale Solar 5 (LSS5) projects, provides clear revenue visibility. Prospects for future contract wins are also promising, with robust pipelines from upcoming LSS5+, Battery Energy Storage System (BESS), and LSS6 programmes. Given its established market position and proven track record, the company is well-positioned to capitalize on a significant share of these emerging opportunities. Analysts project the company to secure substantial new wins, estimated at RM2.8 billion and RM1.6 billion for FY27 and FY28, respectively.
Furthermore, a recent 1.5GW joint investment with a prominent international partner is expected to reinforce the company’s long-term growth trajectory, enhancing its EPCC (Engineering, Procurement, Construction, and Commissioning) earnings potential and strengthening its recurring income base. This strategic partnership is set to unlock further value and solidify the firm’s position as a dominant player in the renewable energy landscape.
Key Risks
Despite the optimistic outlook, potential downside risks include changes in government renewable energy policies, delays in project execution, intense market competition, and volatility in solar PV panel prices. These factors could impact future performance and require careful monitoring.
Analyst’s Recommendation
Analysts reiterated a ‘BUY’ rating on the company, reaffirming its status as a preferred sector pick. The investment bank views the company as a dominant force in the solar renewable energy sector, poised to benefit significantly from the nation’s ambitious renewable energy agenda. The maintained target price reflects confidence in the company’s growth prospects and its ability to consistently deliver strong financial results.
