Solarvest gains ground in share price following positive news flow

Solarvest Holdings Bhd has lost some ground after hitting a 52-week high of RM1.83 in mid-july. It managed to rebound to close at RM1.66 on Nov 14 and signs point to further share price appreciation.

Investors appear to be positive on the clean energy specialist’s 30%-owned unit Selarong Pertama Energy Sdn Bhd (SPE), which has recently obtained green light to operate as a merchant generator. The unit obtained the approval from national utility firm, Tenaga Nasional Bhd to sell energy to the single buyer from a 29.99 megawatts (MW) facility to be built in Kulim, Kedah.

SPE has entered into a new enhanced dispatch agreement (Neda) with TNB on Nov 7 to undertake the project. SPE is a joint venture between Blazing Solar Sdn Bhd (BSSB), a wholly-owned subsidiary of Solarvest (30%), Savelite Engineering Sdn Bhd (SESB, 40%), and TNB Renewables Sdn Bhd (TRSB, 30%).

The renewable energy produced will be sold virtually via a separate Corporate Green Power Agreement (CGPA) to Micron Semiconductor Malaysia Sdn Bhd.

TNB agrees to give SPESB the access to TNB’s bulk power network for the supply of the energy generated by the facility. Based on the CGPA, Micron Semiconductor Malaysia will offtake the RE produced by the facility, along with bundled Renewable Energy Certificates (RECs), for 21 years.

Last month, Solarvest’s 70%-owned unit Setia Kawan Energy Sdn Bhd (SKESB) was also approved by TNB to operate as a merchant generator to sell a similar capacity of energy to the single buyer, but from Manjung, Perak.

The RE produced from the facility will be sold virtually via four separate CGPAs to Texas Instruments Malaysia Sdn Bhd, Micron Semiconductor Malaysia, Bursa Malaysia Bhd and NTT Global Data Centers CBJ1 Sdn Bhd.

While Solarvest is gaining ground in terms of local projects, the company wants to grow its RE business beyond solar and expand its presence abroad. It is already in Singapore, Indonesia, Thailand, Vietnam, the Philippines and Taiwan.

The company is looking for the right opportunities to enter Laos and Cambodia. Geographical diversification is its long-term strategy to ensure steady earnings flow and to manage the risks to its business. We always wanted to diversify into six to seven countries because solar or RE is policy-driven. It has fared commendable in terms of financial performance.

Solarvest posted a 66% year-on-year jump in net profit to RM32.6 million in FY Mar 2024. It managed to register a 17% y-o-y increase in net profit in 1QFY25.

According to consensus estimates, the group is projected to register higher net earnings of RM46.3 million in FY Mar 2025 before increasing to RM58.4 million in FY Mar 2026. Forward earnings will be driven by its unbilled order book of RM469 million as of end-Jul 2024, which will be recognised progressively over the next two financial years.