Samaiden Group Berhad - Post-results briefing takeaways
Thu, 12-Sep-2024 07:30 am
by Tan Sue Wen • Apex Research

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SAMAIDEN (0223)

Target Price (RM)

1.66

Recommendation

Buy

Company Update

 

  • We attended Samaiden’s post-results briefing yesterday and came away feeling reassured over current operations and future prospects. Below are the key takeaways:

 

  • LSS5 Details. Samaiden aims to secure at least 10% (equivalent to 200MW) of EPCC jobs, alongside 100MW in asset ownership from LSS5. We estimate these initiatives could generate c.RM600m in project value, with major contract billings expected to begin in 2HFY25. Historically, Samaiden has captured c.15.0% market share in LSS cycles. Backed by their strong track record in ground-mounted solar, we believe the 10% target for LSS5 is achievable.

 

  • CGPP Delays. We came away with further insights over the delays in finalisation of CGPP contracts. The delays were attributed to i) some offtakers withdrawing from the program due to concerns of economic slowdown, and ii) rising commodity prices, especially copper, that have sharply increased substation construction costs. We believe Samaiden is capable of managing these challenges, given their extensive experience in the field.

 

  • Order Book Replenishment Outlook. Samaiden’s current order book stands at RM313.5m (C&I: 30%, Biomass: 30%, with the remainder from other RE sources), equivalent to 1.8x FY23 revenue. Over the near term, we expect new project wins to primarily derive from the 800MW CGPP tender. Combined with CRESS, 450MW NEM quota, and the deflationary trend in solar module prices (currently at a historic low of USD 0.10/watt), we believe these factors will drive further solar investments, keeping Samaiden busy until 2028.

 

  • Earnings revision. No changes to our forecasts, as the key takeaways from the briefing are in line with our expectations.

 

  • Valuation. Maintained BUY recommendation for Samaiden with an unchanged target price of RM1.66 based on SOP valuations. We continue to favour Samaiden due to (i) its position as a specialist in ground-mounted solar PV projects, (ii) its lowest gearing ratio (0.05x as at FY24) compared with its listed peers, and (iii) its expertise in bioenergy solutions, differentiating it from other solar EPCC players.

 

  • Risk. Reversal in solar module costs. Heavy reliance on government initiatives. Intense market competition.

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