Investment Highlights

• We maintain HOLD on Solarvest Holdings with an unchanged fair value of RM1.55/share, based on a fully- diluted FY25F PE of 25x, which is the 2-year average. We ascribe a neutral 3-star ESG rating to Solarvest.

• Solarvest’s FY24 net profit of RM32.3mil was within our forecast and consensus estimates. The group did not declare dividends in FY24.

• Solarvest’s net profit soared by 63.6% to RM32.3mil in FY24, underpinned by a higher order book. Solarvest’s revenue surged to RM492.6mil in FY24 from RM365.5mil in FY23. Solarvest completed 7 LSS4 projects in FY24. Unbilled order book stood at RM242mil as at 31 March 2024.

• EBIT of the solar EPCC division climbed by 38% to RM44.7mil in FY24. Bulk of the earnings were driven by LSS4 projects. EBIT margin of the EPCC division expanded to 9.9% in FY24 from 9.1% in FY23 on the hack of a lower cost of solar panels.

• EBIT of the sale of electricity jumped to RM7mil in FY24 from RM1.7mil in FY23, driven by the commissioning of Solarvest’s LSS assets in 3QFY24. However, the division’s EBIT margin dived to 58.5% in FY24 from 88.7% in FY23, dragged by higher operating expenses. Solarvest owns 3 LSS assets in Selangor and Perak with a total capacity of 67.3MWp.

• Comparing 4QFY24 against 3QFY24, Solarvest’s net profit slid by 27.4% to RM7.7mil due to the completion of LSS4 EPCC projects in 3QFY24. We believe that it will take time before earnings from the CGPP projects come onstream.

• EBIT of the sale of electricity rose to RM3.3mil in 4QFY24 from RM1.8mil in 3QFY24 due to increased sales to Tenaga Nasional from the LSS assets in Selangor and Perak. EBIT margin edged up to 54.8% in 4QFY24 from 51.1% in 3QFY24.

• Solarvest is currently trading at a fully-diluted FY25F PE of 27.1x - at a premium to its 2-year average of 25x.

Source: AmInvest Research - 31 May 2024