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Investor’s #1 Concern on Solar Companies Are Wrong
faizalraiz
4-5 minutes
Investor’s #1 Concern on Solar Companies Are Wrong
Recently, there has been an article published by The Edge, Malaysia hammering down the solar companies, claiming that it was a euphoria and the main focus was on Pimpinan Ehsan Berhad (“PEB”).
If this is your first time coming across PEB, this company was classified under PN 16 previously, which means that this company had disposed their core business in the past and transformed into a cash company. The definition of a cash company is that the company do not have any major contributor to their top and bottom line but was cash rich pending for acquisition of any potential investments.
In short, this is somewhat like the SPAC in United State, but it was more prudent in Malaysia, as the market capitalization is much close to the cash war chest the company had.
PEB had in recent signed a Heads of Agreement (“HoA”) with reNIKOLA Sdn. Bhd., a pure play renewable energy company with total 418 MWp assets in line. However, to further clarify the 418 MWp, their solar power plant located in Arau, Perlis, Gebeng, Pahang and Pekan, Pahang sums up to a total of 88 MWp. These solar PV plants had already signed Power Purchase Agreement (“PPA”) with TNB. The article popped up on The Edge weekly today did not mention any of the existing capacity of the operating solar PV plants that the company had, and just emphasised on of the largest was in construction. Which to me, this is extremely lazy and irresponsible and would to the extent I say, misleading.
This article also commented that reNIKOLA is more like CYPARK. By comparison of which is more similar between SLVEST and CYPARK; yes, it is more like CYPARK. But this comparison is incorrect to begin with, it’s like comparing which flesh of watermelon is closer to the skin colour of an apple!
Undeniably, CYPARK was a company with strong management team. And as of now, the company is running a total capacity of 47.17 MWp solar PV plant. However, if you did more studies and delve down to the financials of CYPARK, you would undermine that MAJORITY of CYPARK’s revenue comes from environmental engineering, then followed by green tech & renewable energy. Where SLVEST is more of a key EPCC player, it was not in the concession solar PV plant game.
Sorry for straying away this far from our key topic. I just couldn’t stand misleading information being spread onto the investment community.
A lot of investors now are focusing on whether the solar players could get the LSS4 or the recent Johor state recently announced 450 MW Solar Plant (Which did not specify is it MWp or MWac). However, upon interviewing a major EPCC player in town, they claimed that the current LSS4 rate sucks. Another major electrical player in the country did wish that they were to opt out from the deal as well. This space has become more, and more, and more competitive, than ever!
Investors now should focus companies that could truly fit into the ESG requirements. EPF had announced that by 2030, listed companies that do not fit into ESG requirements would be “punished” by not being invested into. When the big boys said so, I believe smaller fund managers will follow and this includes investment bank’s fund. Not to mention the oversea funds had already practicing this!
Investors should now focus in actual operating solar PV plant companies to enhance their investment returns, and not the EPCC players. The EPCC margin would decrease significantly in the future and if you do not believe me, just refer to SAMAIDEN and SLVEST. CYPARK might be saved as their business is more diversified and the EPCC impact might get cushioned.
Once again, I urge investors to focus on true solar companies and not EPCC contractors. PEB, once listed would be the largest in operation solar PV plant operator in the exchange. The company is now trading at a ridiculously low market capitalization of RM 129 Million, where the new owners had already invested millions to acquire up to 66% of shares on the company!
https://klse.i3investor.com/blogs/isolargem/2021-03-06-story-h1542059772-Investor_s_1_Concern_on_Solar_Companies_Are_Wrong.jsp
