SLVEST (0215): Navigating ASEAN’s Green Energy Grid – A Hold Stance
Summary (TL;DR):
- Research Firm: AMINVEST Investment Bank
- Subject: SLVEST / SLVEST (0215)
- Core Rating: HOLD
- Target Price / Top Picks: MYR 1.90
- One-Liner: SLVEST’s “Hold” rating is maintained due to current valuation, despite the long-term potential of ASEAN’s green electricity trading, which faces hurdles like high costs and regulatory delays.
Report at a Glance
AMINVEST Investment Bank released its latest research report on the Power sector, which includes SLVEST, on 2025-07-08, maintaining a “HOLD“ rating for SLVEST with a target price of MYR 1.90. The core thesis of the report is that while green electricity trading in ASEAN is gaining traction with various interconnector projects, these initiatives are expected to take considerable time to come to fruition due to significant costs and regulatory complexities, leading to a “Neutral” sector view. SLVEST’s specific “Hold” rating reflects its current valuation within this evolving landscape.
Investment Thesis (The Bull Case)
- Point 1: Green electricity trading in ASEAN is gaining significant traction, supported by various interconnector and electricity linking projects across the region.
- Point 2: Recent agreements highlight this momentum, including the Singapore-Sarawak undersea cable project, and new electricity links involving Malaysia, Singapore, and Vietnam, and Singapore and Indonesia.
- Point 3 / Key Beneficiaries: Large utility companies such as Tenaga Nasional (TNB) and Sembcorp, along with international engineering firms like Siemens, PetroVietnam, and Petronas, are identified as primary beneficiaries of these large-scale projects.
Potential Risks (The Bear Case)
- Risk 1: Significant project costs and challenges in cost recovery, with undersea cables estimated at US$30,000-US$50,000 per km, and the need for system access fees and floor prices.
- Risk 2: Progress could be slowed by the complexities of obtaining environmental and jurisdictional approvals, requiring time to legalize frameworks on pricing, third-party access, and environmental impact assessments.
- Risk 3: Projects, despite gaining momentum, are expected to have long gestation periods before they fully come into fruition, impacting near-term realization of benefits.
Financial Forecast Summary
The analyst’s financial projections for the coming years for SLVEST are as follows:
| Fiscal Year (YE to [Not specified in report snippet]) | FY25F | FY26F | FY27F |
|---|---|---|---|
| Revenue (RM mil) | N/A (Not provided in report snippet) | N/A (Not provided in report snippet) | N/A (Not provided in report snippet) |
| Net Profit (RM mil) | N/A (Not provided in report snippet) | N/A (Not provided in report snippet) | N/A (Not provided in report snippet) |
| EPS (sen) | 7.7 | 8.5 | N/A (Not provided in report snippet) |
| DPS (sen) | N/A (Not provided in report snippet) | N/A (Not provided in report snippet) | N/A (Not provided in report snippet) |
| Dividend Yield (%) | N/A (Not provided in report snippet) | N/A (Not provided in report snippet) | N/A (Not provided in report snippet) |
| P/E Ratio (x) | 28.6 | 25.9 | N/A (Not provided in report snippet) |
(Source: AMINVEST Investment Bank research report)
Valuation & Target Price
| Rating | HOLD |
| Last Close Price | MYR 2.20 |
| Target Price (TP) | MYR 1.90 |
| Valuation Methodology | Based on Price-to-Earnings (P/E) multiples, as indicated by the provided P/E forecasts. Specific details not explicitly stated in report snippet. |
Analyst’s Conclusion
- Overall Stance: AMINVEST maintains a “Neutral” stance on the broader Power sector due to the long-term nature and complexities of green energy projects, and a “HOLD” rating on SLVEST primarily due to its current valuation relative to the target price.
- Key Catalyst/Strength: The increasing momentum and policy support for cross-border green electricity trading and interconnector projects within ASEAN present a significant long-term growth opportunity for the sector.
- Major Headwind/Risk: The most significant challenges are the substantial project costs, the intricate process of securing environmental and jurisdictional approvals, and the inherently long gestation periods required for these large-scale infrastructure developments.
- What to Watch: Investors should monitor the progress of key interconnector projects (e.g., Malaysia-Singapore-Vietnam link), developments in regulatory frameworks for cross-border electricity trade, and the establishment of clear cost recovery mechanisms.
Disclaimer: This article is a summary and interpretation of a research report published by AMINVEST Investment Bank on 2025-07-08. All information is for reference purposes only and does not constitute investment advice. Investors should conduct their own independent research and due diligence and assume all associated risks.
