Northern Solar Holdings Bhd, a key player in Malaysia’s renewable energy (RE) sector, is set to debut on Bursa Malaysia’s ACE Market this Thursday (Feb 6). This marks the fourth ACE Market listing of the year, reinforcing the increasing investor interest in sustainable energy ventures.
A Prominent Solar EPCC Specialist
Through its subsidiaries, Northern Solar specializes in the engineering, procurement, construction, and commissioning (EPCC) of solar photovoltaic (PV) systems. Additionally, the company generates renewable energy while overseeing the operation and maintenance of solar PV equipment and infrastructure.
The company’s initial public offering (IPO) entails the issuance of 67.25 million new shares, complemented by the offer for sale of 35.6 million existing shares via private placement, all at an issue price of RM0.63 per share. The listing will provide investors with a 26% stake in Northern Solar.
IPO Proceeds and Utilization
The public issuance is expected to generate RM42.37 million in gross proceeds, primarily allocated towards expansion and working capital. Meanwhile, the sale of existing shares will raise RM22.43 million for its selling shareholders, including co-founders Lew Shoong Kai and Chew Win Hoe, each currently holding a 42.5% stake in the company.
Post-listing, Lew, who serves as Northern Solar’s Managing Director, and Chew, the Executive Director, will each retain a 30.8% stake in the company. Meanwhile, real estate developer Lagenda Properties Bhd (KL:LAGENDA) will maintain a 12.5% shareholding.
At the IPO price, Northern Solar’s market capitalization will reach RM249.23 million based on its enlarged share capital of 395.6 million shares. This translates into a price-to-earnings (P/E) ratio of 24.7 times its financial year ended March 31, 2024 (FY2024) earnings.
Strong Financial Growth and Market Position
Northern Solar’s financial performance underscores its growth trajectory. In FY2024, the company reported a net profit of RM10.09 million on a revenue of RM77.97 million, marking a significant leap from its FY2023 figures of RM6.12 million and RM44.67 million, respectively.
The IPO’s public portion—comprising 19.78 million shares—saw overwhelming investor demand, with an oversubscription rate of 73.2 times. Additionally, 7.91 million shares were reserved for eligible directors and employees, while 39.56 million shares were allocated to Bumiputera investors through private placement.
The company intends to utilize the RM42.37 million raised from the IPO as follows:
- RM29.17 million for working capital
- RM5.5 million to repay bank borrowings
- RM4.55 million to cover listing-related expenses
- RM3.2 million to establish a new corporate office in Petaling Jaya, along with expanding operations in Johor and Penang
M&A Securities serves as the adviser, sponsor, underwriter, and placement agent for the IPO.
Future Prospects and Growth Strategy
Northern Solar stands out in the solar EPCC landscape due to its exclusive focus on rooftop solar projects catering to industrial, commercial, and residential clients. Notably, the solar PV EPCC business contributed 98.8% of its FY2024 revenue.
TA Research, in an IPO note dated Jan 13, highlighted the company’s exceptional growth, with a two-year compound annual growth rate (CAGR) of 87% in revenue and 80% in net profit from FY2022 to FY2024. The firm projects Northern Solar’s revenue to grow at a three-year CAGR of 20.1% from FY2024 to FY2027, underpinned by a robust order book of RM83.2 million as of November 2024—equivalent to 1.1 times its FY2024 revenue.
Moreover, Northern Solar has submitted 387 tenders worth RM1.8 billion. Based on its historical success rate of 15%, this could potentially translate into RM270 million in new project acquisitions.
TA Research has assigned a fair value of RM0.98 per share, valuing Northern Solar at 19.8 times projected FY2026 earnings, in line with industry peers. PublicInvest Research, on the other hand, values the stock at RM1.00 per share.
A Pioneering Force in Malaysia’s Renewable Energy Industry
Founded in 2019, Northern Solar has rapidly established itself as a leading name in Malaysia’s RE sector, having completed over 1,000 solar installations nationwide with a total installed capacity of 71.9MW. The company currently owns and operates 17 solar PV systems, alongside four additional systems via its 20%-owned associate, Engtex Energy Sdn Bhd—a joint venture with pipe and valve manufacturer Engtex Group Bhd (KL:ENGTEX).
Additionally, it holds a 51% stake in Norwatt Power Sdn Bhd, with 25% owned by Tengku Fahad Mua’adzam Shah Sultan Ahmad Shah through Hawthorne Capital Sdn Bhd.
Commitment to Sustainability and Shareholder Returns
While Northern Solar has yet to establish a formal dividend policy, the company has expressed its intention to distribute dividends to shareholders in the future. The IPO not only accelerates its growth ambitions but also positions it at the forefront of Malaysia’s renewable energy transition.
With a clear strategic vision and strong industry tailwinds, Northern Solar’s debut on Bursa Malaysia is poised to generate significant investor interest, marking a milestone in the nation’s renewable energy landscape.
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