Maybank Investment Bank Bhd (Maybank IB) has maintained its BUY call for Solarvest Holdings Bhd with an unchanged target price of RM1.84. According to Maybank IB, the company's 1HFY25 results showed a net profit at 36%/37% of both Maybank IB and consensus' full-year estimates.
The shortfall was attributed to the early stage of Corporate Green Power Programme (CGPP) EPCC works, which only commenced in 2QFY25. However, Maybank IB expects a significant ramp-up in works recognition for these contracts from the second half of FY25, with Solarvest's unbilled EPCC order book reaching a record high of RM961 million.
In 2QFY25, Solarvest's core net profit grew by 28% year-on-year (YoY) and 17% quarter-on-quarter (QoQ) to RM9.2 million. Analysts noted that this improvement was largely driven by a 50% increase in EPCC revenue QoQ, thanks to the commencement of several CGPP projects.
The company also saw a higher blended profit-before-tax (PBT) margin, which rose by 0.5 percentage points to 14.7%. However, analysts pointed out that the QoQ earnings were partly offset by a 15% decline in electricity sales, a 4% weaker O&M contribution, and an 87% rise in taxes.
The unbilled EPCC order book is now at its highest level ever, standing at RM961 million, according to Maybank IB. This includes RM675 million in CGPP projects, RM285 million in commercial and industrial (C&I) and residential projects, and RM1 million in other works.
Maybank IB highlighted that RM896 million of the order book has already been secured in FY25 to date, with an additional RM200-300 million worth of CGPP works expected to be awarded in 3QFY25. Beyond CGPP, Solarvest is targeting quarterly replenishment of RM50 million for C&I projects.
Despite the early-stage nature of some projects, analysts from Maybank IB noted that Solarvest's strong order book provides good earnings visibility through FY26E. The house has left its earnings forecasts unchanged, having already factored in RM1 billion in job wins for FY25E.
Maybank IB remains optimistic about Solarvest's prospects, especially in expanding its order book and asset base in response to the growing demand for renewable energy in the medium to long term.
The stock price closed at RM1.58, with a 12-month target price of RM1.84. With solid growth potential in the renewable energy sector, Solarvest remains a promising prospect for investors looking for exposure to Malaysia's clean energy transition, according to Maybank IB.
