KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB) has cast a positive outlook on Solarvest Holdings Bhd, expecting it to perform stronger in the coming quarters.
This is after Solarvest registered earnings of RM6.7 million for the first quarter (Q1) of the financial year 2024 (FY24) which is above HLIB's expectations by 26 per cent.
HLIB increased Solarvest's earnings forecasts for FY24 by 3.4 per cent, FY25 by 17.2 per cent and FY26 by 13.6 per cent after taking into account higher engineering, procurement, construction and commissioning (EPCC) progress, recalibrated margins and Corporate Green Power Programme (CGPP) winnings.
Solarvest obtained a cumulative 89.9 megawatt quota through three separate consortiums after securing the first batch of CCPP contracts.
"We gather that through the three entities, Solarvest has equity stakes of more than 50 per cent stake for one, while stakes for the remaining two range between 10-30 per cent. The above is not inclusive of its potential participation as a pure EPCC role in several shortlisted projects," it said.
HLIB said the with the reaffirmations of government's commitment towards 70 per cent of renewable energy (RE) target by 2050 via National Energy Transition Roadmap (NETR) under Phase One, Solarvest is poised to be the beneficiary of the new development.
"The 10 flagship catalytic projects worth an estimated RM25 billion is an early catalyst towards Malaysia's net zero goal that will ultimately require investments worth between RM435 billion and RM1.85 trillion by 2050," it added.
HLIB said as a dominant player in the ecosystem, Solarvest's EPCC orderbook is expected to grow.
"We expect positive share price sentiment to sustain in the coming months with ongoing awards of CGPP quotas, EPCC contracts, NETR Part 2 and Budget 24," it said.
HLIB upgraded its call on Solarvest to "Buy" with a target price of RM1.55.
