MIDF Amanah Investment Bank Bhd (MIDF Research) has maintained its BUY recommendation on Sunview Group Bhd with a revised target price of 64 sen, down from the previous 75 sen. The adjustment reflects a weaker-than-expected financial performance for the company in the first half of fiscal year 2025 (1H25), with core earnings dropping by 15.1% year-on-year (YoY) to RM3.2 million. Despite this, Sunview's order book remains strong, providing visibility for future earnings.
For the second quarter of FY25 (2Q25), Sunview's revenue showed a notable decline of 75.3% YoY, dropping to RM50.4 million. However, its core earnings grew by 10.2% to RM1.8 million, largely driven by its focus on large-scale solar (LSS) projects. The weaker revenue performance in the quarter was attributed to the recognition of revenue in previous periods from the delivery of solar modules, which did not occur in 2Q25. The company also reported a slight decline in gross profit margin from 19% to 13.9%, attributed to ongoing commercial and industrial rooftop projects.
MIDF Research has revised its earnings estimates for Sunview, slashing FY25 earnings by 31.4% and FY26 by 5.1%, largely due to the underperformance in 1H25 and the margin pressures in its rooftop and commercial projects. Despite these challenges, the firm remains positive on Sunview's long-term prospects, especially in light of favourable policies supporting the solar energy sector such as the National Energy Transition Roadmap and the allocation of RM300 million under Budget 2025 for green energy projects.
Looking ahead, Sunview's prospects remain largely tied to its strong outstanding order book, which currently stands at RM244.6 million as of September 2024. This includes a RM51.9 million Corporate Green Power Programme (CGPP) contract. MIDF Research expects this order book to provide steady revenue streams through FY25, driven by further CGPP job wins and upcoming LSS5 projects.
