SLVEST: Solar Sector Player Secures Major Contract, Bolsters Outlook

A leading solar energy solutions provider has significantly strengthened its market position and future outlook by securing a key contract under the Large Scale Solar PETRA 5+ (LSS5+) program. This development, expected to yield substantial engineering, procurement, construction, and commissioning (EPCC) contracts, has prompted a positive assessment from analysts, who maintain a “BUY” recommendation.

Key Contract Wins and Future Outlook

The company, as part of an 80%-holding consortium with a 20% stake, has been shortlisted to develop a 470MWac large-scale solar photovoltaic (PV) plant in Larut and Matang, Perak. This pivotal achievement is anticipated to lead to EPCC contract awards in calendar year 2026. Management has expressed confidence in achieving another record-breaking year, underpinned by a robust project pipeline and supportive government policies aimed at national energy transition. The estimated value of the EPCC contract for this project alone ranges from MYR1-1.2 billion. The company is also actively pursuing additional EPCC contracts, with aspirations for at least another 30MWac from the LSS5+ program.

The group’s outstanding orderbook currently stands at MYR1.2 billion as of 1QFY26 (Mar), remaining flat quarter-on-quarter, with a significant 77.8% derived from utility-scale projects. This orderbook is projected to reach a record high once the LSS5+ EPCC contracts are formally awarded in 2QCY26. The expansion into asset ownership, potentially generating MYR4-8 million in associate earnings by CY28, aligns with a strategic goal to derive 30% of income from recurring sources. Furthermore, the company is accelerating the execution of commercial and industrial (C&I) projects this year and is participating in the Malaysian Battery Energy Storage System (MyBeST) program, with announcements expected in 4QCY25. Earnings forecasts for FY26-27F remain intact, with recurring income from power generation anticipated to commence by 4QFY28.

Risks to Consider

Despite the positive outlook, several downside risks bear watching. These include the potential for lower-than-expected contract wins, unforeseen changes in project costs, heavy reliance on government policies and initiatives concerning renewable energy, intensified competition, and unexpected increases in operating expenses, such as the imposition of Sales and Service Tax (SST).

Given these developments, the investment bank reiterates its “BUY” recommendation.