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A pure-play solar PV specialist

Initiate with HOLD and MYR1.45 target price

Solarvest is a pure-play solar PV specialist, providing mainly EPCC services for solar PV systems. To-date, it has ~MYR583m outstanding orderbook, or 2.6x FY21’s revenue. As at FY21, it has installed ~360MW of solar PV systems in Malaysia across large scale solar (LSS), residential, commercial and industrial segments. Its solar PV assets is expected to increase by another 50MWAC by 2023, from 1MW currently. We initiate coverage with a HOLD rating, and TP of MYR1.45 to 1x PEG (32% CAGR over the next 3 years).

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LSS4 and NEM to drive turnkey EPCC growth

Solarvest targets to secure at least eight to ten projects of EPCC jobs from LSS4 and NEM 3.0 (Net Energy Metering), where it has ~MYR600m-700m worth of tender pipeline projects. To-date, it has secured four turnkey EPCC contracts from LSS4 owners, worth MYR371m. Meanwhile, Malakoff Corporation and Lagenda Properties has recently appointed Solarvest as the EPCC contractor for their upcoming rooftop projects, which will translate to more EPCC project opportunities for them.

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Expanding its operations regionally

Outside Malaysia, Solarvest also has plans to expand into solar PV markets in the Philippines and Taiwan. Taiwan is set to be the second largest market for the Group after Malaysia, considering its encouraging renewable energy roadmap that allocates 14.2GW of solar PV projects by 2025. It is currently bidding for two LSSPV projects, with 40MW of solar energy generation capacity.

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Net cash position of MYR78m or 12 sen/share

Solarvest’s balance sheet has a net cash position of MYR78m as at FY21, or 12 sen/share, which would enable the Group to undertake more projects in the future. We like Solarvest’s long-term growth story, and believes its positioning within the sector justifies a premium valuation to the sector. However, current share price implies limited upside and we believe that much of its near-term prospects are priced in.