Sunview Group Berhad’s (Sunview) potential entry into Uzbekistan will be that of an asset owner and EPCC contractor. If all goes well, MIDF Research (MIDF) gathered that the group may likely secure ground mounted solar projects worth about several hundred million USD.
Just recently on 18th May, the group’s wholly-owned subsidiary, Fabulous Sunview Sdn Bhd, entered into a strategic business alliance agreement with Yashil Energiya in Samarkand, which was witnessed by both Malaysia Prime Minister Datuk Seri Anwar Ibrahim and Uzbekistan Deputy Prime Minister Jamshid Khodjaev.
Under the agreement, Sunview shall be the investor and EPCC provider for potential RE projects while Yashil Energiya will act as the purchaser of electricity generated. In post-earnings briefing yesterday, management said negotiations are ongoing on the tariff rates.
Sunview will need to raise funds for the potential asset ownership investment in Uzbekistan. This will likely come from both placements and sukuk, though management guided that the former may not be huge. They are already in the midst of discussions to raise funds via green sukuk.
About 30% of Sunview’s outstanding order book of RM210.9m are C&I rooftop projects and it plans to focus on more of such jobs in FY25. Management guided that gross margins for C&I projects are double digits.
They are also looking to expand further into residential rooftop jobs, which MIDF views as the right move moving forward with government initiatives such as the Solar for Rakyat Incentive Scheme (Solaris) which is aimed at encouraging the installation of solar PV systems in residential premises under the Net Energy Metering (NEM) programme.
Sunview’s prospects in FY25 will be driven by the Corporate Green Power Programme (CGPP). It aims to secure five CGPP EPCC jobs which MIDF estimates could be in the range of RM500m, including two from its own CGPP allocations that it secured under two different consortiums. Management guided gross margins for the EPCC works to be in the range of 6%.
MIDF maintains their earnings estimates for FY25E/FY26F and maintain their TP for Sunview at RM0.88. MIDF maintains BUY as Sunview has reached an inflection point in 3QFY24 with compressed margins as its LSS4 projects are now at the tail end. The uptick in performance can be seen in 4QFY24 and MIDF believes this will be sustainable in upcoming quarters, if not better, as management shifts its focus towards C&I projects with stronger margins.
Prospects for solar EPCC players remain bright in MIDF’s opinion, with favourable policies such as the CGPP, National Energy Transition Roadmap (NETR) and the LSS5.
