Solarvest’s new sukuk issuance attractively priced at 5.45%.

Highlight

• Riding on Malaysia’s LSS program and National Energy Transition Roadmap (NETR) which targets 70% renewable energy (RE) by 2050, providing strong visibility for project pipeline and revenue growth.
• Strong order book of RM1.2 billion, with secured contracts including RM401 million from LSS5.
• Solarvest benefits from declining polysilicon prices which enhance cost-efficiency and profitability across its EPCC segment.
• Solarvest's continuous revenue growth, alongside its robust interest coverage ratio of 7.1 times and manageable net gearing ratio of 54%, underscores the company’s solid fundamentals and strong capacity to meet its financial obligations.
• Investors may consider 3-year new sukuk issuance bond SOVEST Jun2028 Corp (MYR), which offers an indicator yield of 5.45%, an A1 credit rating by RAM.

Company Overview

Solarvest Holdings Berhad is a leading clean energy company based in Malaysia. It specializes in engineering, procurement, construction, and commissioning (EPCC) of solar photovoltaic (PV) systems. It also operates in Taiwan, Singapore, Philippines, Indonesia, Vietnam and Thailand. The company also provide services in operations and maintenance, energy storage, EV charging, and renewable energy certificates. Solarvest has developed over 2,000MW of projects and remains the largest solar solutions provider in Malaysia.

EPCC Remains Core Revenue Driver Amid Strong Industry Tailwinds

In FY25 (ended 31 March 2025), Solarvest’s Engineering, Procurement, Construction, and Commissioning (EPCC) segment remained the company’s primary revenue contributor, accounting for 85.6% of total revenue. This aligns with Malaysia’s National Energy Transition Roadmap (NETR), which targets 31% renewable energy by 2025, 40% by 2035, and 70% by 2050 supporting the country’s broader net-zero carbon ambitions.

As show in Chart 1, renewable energy account for only 20% of total electricity generation in 2024, highlighting a significant gap that must be bridged to achieve the government’s clean energy targets.

Chart 1 Share of electricity generation from fossil fuels and renewables (Malaysia)

The Large-Scale Solar (LSS) programme continues to gain momentum, with total capacity awarded by the Malaysian government surging 143%, from 823 MW to 2,000 MW show in Chart 2. This significant increase highlights a growing pipeline of renewable energy projects, positioning Solarvest to capitalise on expanding EPCC contract opportunities.

Solarvest successfully completed its LSS4 projects on schedule in 2024, reinforcing its strong execution track record. In March 2025, the company secured RM401 million in new contracts under the LSS5 programme for a 500MWac solar farm in Kedah. With a solid order book and demonstrated project delivery capabilities, Solarvest is well-positioned to benefit from the upcoming LSS5+ and LSS6 rounds, which together present multi-gigawatt potential in Malaysia’s expanding renewable energy landscape.

To further strengthen its position in the renewable energy value chain, Solarvest has partnered with Huawei Technologies (Malaysia) Sdn Bhd to advance “Solar Plus” storage solutions. This initiative integrates Smart PV inverters and Battery Energy Storage Systems (BESS) into national renewable energy programmes, including the Corporate Green Power Programme (CGPP), LSS, and the Corporate Renewable Energy Supply Scheme (CRESS).

Malaysia’s upcoming BESS programme is set to offer a total capacity of 400MW/1600MWh, divided into four projects of 100MW/400MWh each. The bidding round is expected in Q3 2025. Backed by its established execution record and strong technological alliances, Solarvest is a competitive contender for these projects. Notably, Tenaga Nasional Berhad (TNB) previously secured RM645 million for a 100MW/400MWh BESS project in Sabah, signaling robust national interest in energy storage.

These positive developments enhance Solarvest’s prospect of surpassing its RM2 billion order book target, strengthening both its credit profile and long-term business outlook.

Chart 2: Large Scale Solar (LSS) Quota

Electricity Tariff Hike May Boost RE Project Feasibility

The Malaysian government has announced a 14.2% increase in electricity tariffs for Peninsular Malaysia, effective 1 July 2025. The rate will rise from 39.95 sen/kWh to 45.62 sen/kWh for the 2025–2027 regulatory period. This upward revision significantly enhances the economic attractiveness of renewable energy investments, particularly under Solarvest’s participation in the Corporate Renewable Energy Supply Agreement (CRESA).

The higher tariffs are expected to improve the financial viability of solar energy projects, driving greater adoption of Solarvest’s commercial and industrial (C&I) solar solutions. As businesses increasingly seek to mitigate rising electricity costs and secure long-term energy savings, demand for rooftop and on-site solar installations is anticipated to accelerate. These dynamics will support Solarvest’s efforts to broaden its market offerings, while also contributing to stronger earnings visibility, enhanced margin stability, and long-term business resilience.

Recurring Income Strategy & Asset Ownership Model

Solarvest’s recurring income continues to strengthen, with revenue segment from electricity sales growing 119% in FY 25 from RM12 million to RM26 million driven by its expanding asset ownership model.

Solarvest owns and operates several solar plants under 25-year Power Purchase Agreements (PPAs) with Tenaga Nasional Berhad (TNB), including three newly commissioned LSS4 assets totaling 67.3 MWp as of FY2024 which became fully operational in FY2024. These assets are projected to contribute RM23.0 million in stable annual electricity sales for the next 25 years.

Through its Powervest programme, Solarvest offers zero-capital solar solutions to commercial and industrial clients, supporting clean energy adoption and lease-based recurring revenue. As of 31 March 2025, Powervest has secured 129.0 MWp in cumulative capacity, expected to generate RM50.8 million in annual recurring income upon full completion within 12 to 18 months.

In November 2023, Solarvest and its consortium partners secured 90 MWp under the Corporate Green Power Programme (CGPP), with Solarvest holding an effective 49.5 MWp. These assets, with CGPAs up to 21 years.

These initiatives support Solarvest’s target of achieving 30% recurring revenue, ensuring its future cash flows and positioning it as a leading clean energy developer in Malaysia.

Lower solar panel price enhances Solarvest’s cost advantage

Solarvest stands to benefit from a structural decline in solar panel prices, driven by a sharp drop in polysilicon costs a key raw material used in solar panel production. As shown in Chart 3, The solar panel price has fallen from USD 38/kg in August 2022 to a historic low of USD 4.75/kg in April 2025 mainly due to the global oversupply. The current price is lower than the 2020 low, indicating a favorable decline in Solarvest’s costs of production.

Chart 3: PV Grade Polysilicon price trend from 2018 to 2025

In 2023, China’s polysilicon output surged 66.9% YoY to 1.43 million metric tons, with major producers like Tongwei expanding aggressively. Global manufacturing capacity now exceeds 1,400 GW, while demand remains at 500–600 GW, leading to intense price competition.

As Solarvest primarily sources its panels from China, it is well-positioned to capitalize on lower input costs, enhancing margins across both its EPCC and recurring income segments.

These trends are expected to persist into the near term, which will be beneficial to Solarvest, as it imports solar panels primarily from China allowing it to capitalize on lower input costs.

Strong FY25 for Solarvest: Margin Expansion and Profit Surge on Solar Sector Gains

As shown in Chart 4, Solarvest’s revenue increased by 8% in FY25, rising from RM497 million to RM537 million. The company also recorded a significant 45% improvement in its operating profit margin, which grew from 11% to 16%. This was mainly driven by the Commercial and Industrial (C&I) business segment, which benefited from lower solar panel prices.

In addition, Solarvest’s gross profit rose by 51% in FY25, from RM99 million to RM150 million. This growth was supported by higher gross profit contributions from the utility-scale solar (LSS) segment, as well as electricity sales from three LSS4 plants owned by the Group.

Chart 4: Solarvest’s revenue and operating profit margin trend

Strengthened Leverage to Drive Growth, Backed by Sound Liquidity and Debt Servicing Capacity

As shown in Table 1, Solarvest’s total debt surged by 86% in FY25, increasing from RM173 million to RM322 million. Consequently, the Group’s net gearing ratio rose from 42% to 54%. This significant increase in leverage is likely aimed at funding the active execution of large-scale solar initiatives, particularly under the secured Corporate Green Power Programme, as well as supporting working capital needs tied to the Group’s expanding operations, sizeable order book of RM1.2 billion and overall business growth.

Significant increase in short term debt rising sharply from RM9.5 million to RM141.9 million in FY25. This led to a substantial decline in the cash-to-short-term-debt ratio, falling from 7.83 times to 0.88 times signaling tighter short-term liquidity and potential pressure on near-term financial flexibility.

With the unutilised capacity of RM832 million under Sukuk Programme, Solarvest could take advantage of Sukuk issuance to refinance its short-term debt, so the cash-to-short-term-debt ratio less than one time should not be a major concern.

Despite the elevated short-term obligations, Solarvest maintains a cash balance of RM125 million as of FY25, as shown in Table 1. In addition, the Group holds an order book worth RM1.2 billion, which is expected to be progressively recognized over FY2026 and FY2027. These factors collectively provide visible future cash flows as a buffer to cover the total debt of RM322 million.

Operationally, Solarvest demonstrates healthy financial metrics, with an interest coverage ratio of 7.1 times, indicating a strong ability to pay interest obligations through its earnings. Meanwhile, the net debt-to-EBITDA ratio remains steady at 2.0 times, reflecting a lower leverage level relative to its profitability.

Supported by a solid track record of project execution and strong revenue visibility, Solarvest appears well-positioned to manage its debt obligations while sustaining long-term growth momentum.

Table 1: Solarvest Key Credit Metrix

Overall, Solarvest’s strong FY25 performance, led by its EPCC segment and expanding project pipeline, supports its growth outlook. We believe its credit profile is solid, given its lower leverage level, strong order book, visible future cash flows and favorable industry trends position the Group well for continued expansion and solid credit standing.

Recommendation

The company operates within a growing renewable energy sector, strongly supported by government initiatives to increase renewable energy generation capacity. Solarvest combines low leverage, healthy liquidity, and a robust order book, positioning the Group well for sustained growth and maintaining a solid credit profile.

Interested investors can subscribe by hovering to the bond IPO section or by clicking this link.

Table 2: Solarvest Holdings Berhad upcoming bond issuance(s)

We maintain a positive outlook on Solarvest’s repayment capabilities over the next three years. However, prospective investors should carefully assess potential risks, including the possibility of policy reversals in renewable energy, intensifying competition in the solar EPCC segment, rising project costs, supply chain uncertainties, and other industry-related risks before making investment decisions.

Key risks

• Policy Reversal on Renewable Energy (RE): Solarvest’s growth heavily relies on Malaysia’s supportive RE policies like the NETR and LSS programs. Any shift in government priorities such as delays, reduced RE targets, or cuts in fiscal support could directly impact project flows and industry momentum, weakening Solarvest’s growth prospects and earnings visibility.
• Rising Competition in Solar EPCC: The booming clean energy sector continues to attract new players into the solar EPCC space. Increased competition could lead to margin compression, especially in price-sensitive tenders. If competitors bring advanced technology, stronger financing, or strategic alliances, Solarvest may face pressure to maintain its market leadership and win rates.
• Escalating Project Costs and Supply Chain Risks: A Solarvest’s solar panels are imported from China, exposing the company to supply chain volatility and foreign exchange risks. Any disruptions such as China’s export controls, trade restrictions, rising shipping costs, or weakening ringgit could lead to higher project costs.