KUALA LUMPUR: Mercury Securities Sdn Bhd estimates Sunview Group Bhd to record a stronger second half (2H) for the financial year 2023 (FY23) on the back of higher revenue recognition from its existing order book and improved margins due to declining raw material costs.
The company recently accepted the RM122 million letter of award (LoA) to undertake the engineering, procurement, construction and commissioning (EPCC) of a solar energy facility to develop Nextenaga's Badong large-scale solar photovoltaic in Selangor which will improve its earnings visibility going forward.
The company also applied to tender for the virtual power purchase agreement (VPPA) as of February 7, 2023.
Mercury Securities said it would strengthen its earnings visibility for the next two financial years if successful.
The company has an order book of RM777.3 million as of January 2023, where approximately RM100 million is expected to be fully recognised by FY23.
"We think that Sunview is well-positioned to benefit from the recent fall in raw material prices and an increase in solar photovoltaic (PV) demand under the Government's Energy Transition Plan 2021 – 2040 with a target to increase the share of renewable energy in the total installed capacity in Malaysia to 31 per cent in 2025 and 40 per cent in 2035," it said.
Sunview had completed 110 EPCC of rooftop solar PV facility projects as of January 2023, ranging from industrial, residential, and commercial buildings with a cumulative installed capacity of a 25.1-megawatt peak.
The company also completed 21 projects on the construction and installation of solar PV facilities with a total contract value of RM38.1 million with a total installed capacity of over 300.0 MWac.
Sunview plans to leverage its experience and track record in EPCC of solar PV facilities to venture into the EPCC of other renewable energy facilities like biogas plants designed to generate electricity by using waste materials such as agricultural waste.
The company also intends to set up a new office to expand its business in Johor to address potential opportunities in the EPCC of rooftop solar PV facilities and target commercial and industrial applications in the Southern region.
Mercury Securities recommended a 'Buy' on the company with a revised target price of RM1.06 from 76 sen previously.