SLVEST: Robust Fundamentals and Strategic Cost Management Bolster Outlook, Target Price Raised

An investment bank has reaffirmed its positive outlook on a key player in the clean energy sector, highlighting the company’s robust fundamentals and strategic cost management strategies. Analysts believe the recent share price correction is overdone, with key concerns already priced in, presenting an attractive re-entry point for investors ahead of the next growth cycle.

Performance Review and Cost Efficiencies

The company continues to demonstrate a strong earnings trajectory supported by a robust project pipeline. A significant factor underpinning its positive outlook is the securing of a 2GW blanket panel order at a fixed price, ensuring major cost visibility over the next 18-24 months. This order is backed by a dual-deposit structure, which substantially mitigates the risk of supplier default. Furthermore, the company collaborates with top-tier, China-listed manufacturers, enhancing the reliability of its supply chain.

Addressing External Headwinds

Concerns surrounding China’s impending removal of a 9% export VAT rebate on solar panels, effective April 2026, which could lead to an approximately 9% increase in panel prices, are largely considered to have a negligible impact on earnings. The company is expected to pass through these higher module procurement costs in new Engineering, Procurement, Construction, and Commissioning (EPCC) contracts. Existing large-scale projects, secured under previous terms, remain unaffected due to fixed-price procurements.

Additionally, the stable polysilicon prices and a strengthening Malaysian Ringgit (MYR) against the Chinese Yuan (CNY) are anticipated to provide a natural hedge against potential panel price hikes, further cushioning any impact from the VAT export subsidy changes. While execution risks such as temporary shipment delays are acknowledged under a sharply higher spot pricing scenario, outright supplier default is not considered a base-case outcome given the robust supply agreements and supplier quality.

Future Outlook and Recommendation

Analysts maintain their earnings forecasts, concluding that the VAT export subsidy cut will have minimal effect on the company’s financial performance. The current market valuation is viewed as a floor, with substantial upside potential as the company prepares for its next growth phase, driven by its strong project pipeline and strategic cost controls.

The investment bank reiterates its positive recommendation, signaling confidence in the company’s ability to navigate market challenges and capitalize on future growth opportunities within the renewable energy sector.