PETALING JAYA: Renewable energy solutions provider Northern Solar Holdings Bhd, en route to a transfer to the Main Market of Bursa Malaysia in the coming months, is moving to a stronger earnings cycle, says Apex Securities.

The brokerage, which does not rate the stock, has put a fair value of RM1.44 on Northern Solar, applying a 15 times price-to-earnings (PE).

This represents a 34% discount to the 22.8 times average for Solarvest Holdings Bhd

, Samaiden Group Bhd

and Pekat Group Bhd

, given the company’s smaller scale and relatively shorter operating track record.

It believes earnings “are entering an inflection phase”, as the company moves into a stronger earnings cycle underpinned by large-scale solar five (LSS5) execution and continued engineering, procurement, construction and commissioning (EPCC) project replenishment.

“We forecast revenue to more than double from RM113mil in financial year ended March 31, 2026 (FY26) to RM264.2mil in FY27, lifting core net profit by 74% to RM26.6mil.

“We expect another 42% increase in core net profit to RM37.9mil in FY28, with earnings per share rising from 3.9 sen in FY26 to 9.6 sen by FY28,” it said.

The RM119.39mil LSS5 award, which marks its entry into larger utility-scale solar and grid-interconnection work, provides near-term earnings visibility, with 60% scheduled for recognition in FY27 and the balance in FY28.

This project includes RM71.86mil of collector lines and interconnection scope.

“Beyond the immediate revenue contribution, the project provides a track record in medium and high-voltage infrastructure and strengthens Northern Solar’s credentials for future utility-scale opportunities.

“We see this as an important step in broadening the company’s addressable market beyond rooftop and commercial and industrial (C&I) projects,” it added.

It said the Corporate Renewal Energy Supply Scheme (Cress) offered significant upside.

“Management is currently finalising details of a potential 170-megawatt solar-plus-storage Cress project, with Northern Solar expected to participate as asset owner rather than contractor,” it said.

The Cress project has an indicated value of more than RM800mil, with a two-and-a-half-year construction period and a single data-centre offtaker.

If secured, it would represent a significant step-up from Northern Solar’s existing asset base and accelerate its transition towards long dated power purchase agreement income.

“We have not incorporated the potential project into our earnings forecasts or valuation, making it an additional upside catalyst rather than a prerequisite for our current investment case,” it said.

Northern Solar entered FY27 with RM189.3mil of unbilled order book and RM2.23bil of active tenders, up from RM110mil and RM1.96bil, respectively, a year earlier.

“EPCC replenishment remains healthy at around RM16mil per month, supported by approximately RM10mil of C&I and RM5mil to RM6mil of residential Accelerated Transition Action Programme opportunities,” it said.

Meanwhile, LSS5, LSS5+ and LSS6 should continue to expand the utility-scale opportunity set, while battery energy storage system requirements increase the contract value of larger solar installations.