SLVEST: Renewable Energy Firm Posts Strong 9M Performance, ‘BUY’ Rating Reaffirmed
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading renewable energy player has reported a robust performance for its nine-month financial period ending March 2026 (9MFY26), with core net profit surging by 76% year-on-year to RM59 million and revenue increasing by 57% year-on-year to RM488 million. These results were in line with analysts’ expectations, accounting for 79% of the bank’s projections and 76% of consensus estimates.
Performance Drivers
The strong financial showing was primarily attributed to higher contributions across all business segments. The Engineering, Procurement, Construction, and Commissioning (EPCC) segment saw a significant 64% year-on-year increase, while Operations & Maintenance (O&M) grew by 14%, and Solar assets by 26%. Other business segments also contributed significantly with a 13% rise. Additionally, a substantial increase in profit share from associate companies further bolstered the financial results. Despite these gains, the EBITDA margin experienced a slight decline of 1.0 percentage point to 19.5%, primarily due to a higher revenue mix from the EPCC segment.
Outlook Remains Strong
The company’s future prospects remain positive, underpinned by a robust outstanding order book of RM1.5 billion as of December 31. This order book comprises projects from the Large Scale Solar (LSS) scheme (68%), Corporate Green Power Programme (CGPP) (19%), and Commercial & Industrial (C&I) + Residential (13%) segments. Management anticipates securing an additional RM1 billion in EPCC contracts by the fourth quarter of FY26. The firm has also proactively secured 2GW of solar modules at locked-in prices, mitigating potential future price volatility.
Its asset ownership portfolio is expanding, now exceeding 500MWp, with 135MWp secured under corporate Power Purchase Agreements (PPAs), projected to generate RM52 million in annual recurring income upon completion. Management expressed confidence in continued growth, supported by a substantial tender book of approximately 9.8GWp for Solar projects and 300MWh for Battery Energy Storage Systems (BESS), along with the accelerated rollout of CGPP and LSS5 projects. The company is actively pursuing opportunities in the C&I segment, which is viewed as less susceptible to solar module price fluctuations and potentially offers more attractive internal rates of return.
Investment Recommendation
Analysts maintain a “BUY” rating on the company, reiterating an unchanged SOP-derived target price of RM3.80. The positive outlook is driven by the company’s leading position in the solar renewable energy sector and its expected role as a key beneficiary of national energy transition initiatives. Key risks identified include potential changes in government renewable energy policy, project execution delays, intense market competition, and volatility in solar module prices.
