Samaiden Group Berhad - A Temporary Dip
Mon, 02-Dec-2024 06:23 am
by Tan Sue Wen • Apex Research

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SAMAIDEN (0223)

Target Price (RM)

1.66

Recommendation

Buy

  • Within expectations. Samaiden’s 3MFY25 core net profit (CNP) of RM3.9m accounted for only 19.0% of our CNP forecast of RM20.5m and 18.1% of the consensus FY25F CNP forecast of RM21.5m. We deemed the results to be within expectations, as we anticipate stronger performance in the upcoming quarters, driven by the commencement of large-scale solar and biomass projects. A first interim dividend of 1.5 sen/share was declared.

 

  • QoQ. 1QFY25 CNP (after adjusting for RM1.2m in ICP and IMTN expenses, and RM0.6m FV gain) slipped by -15.8% qoq to RM3.9m, accompanied by a -13.7% qoq decline in revenue to RM49.4m. The weaker bottom line was mainly due to lower contributions from the EPCC segment (EPCC revenue -13.7%) and margin contraction in ongoing EPCC projects. The core margin contracted by 0.2%-pts to 7.9%, reflecting these factors.

 

  • YoY/YTD. CNP increased by +20.0% yoy to RM3.9m, primarily driven by (i) higher contributions from the power supply division (power supply revenue +238.3%), (ii) cost savings from lower solar module costs (-41.2% yoy to 0.17 sen/w as of Sept 24), and (iii) the tail-end completion of LSS4 projects, which yielded lower margins. As a result, the Group’s 1QFY25 CNP margin improved by 0.9%-pts to 7.9%, as compared to the previous corresponding quarter.

     

  • Outlook. Over the near term, we expect the Group to secure additional orders from the 2GW LSS5 projects, with shortlisted winners expected to be announced soon. To recap, Samaiden aims to secure at least 10% of EPCC jobs and 100MW in asset ownership from LSS5. Historically, Samaiden captured c.15% market share in LSS cycles. Given their strong track record in ground-mounted solar projects, we believe the 10% target for LSS5 is achievable. As of 30 Sep 2024, Samaiden's unbilled order book stood at RM521.2m (CGPP 45%, Bioenergy 35%, C&I 16%, with the remainder from others), which is equivalent to 2.2x its FY24 revenue of RM497.0m.

 

  • Separately, US trade officials recently announced tariff hikes on solar panel imports from four Southeast Asian nations, including 21.3% for products made in Malaysia, 56.5% for Vietnam, 77.9% for Thailand, and 54.5% for Vietnam. This is expected to alleviate oversupply issues in the medium term, as ~80% of solar panels in the US are sourced from these regions, with local sourcing policies also likely playing a big part. Over the short term, this could further drive the decline in solar module prices (currently at USD0.09/w), benefiting local RE EPCC players and asset owners seeking cheaper modules.

 

  • Earnings revision. No change to our earnings forecasts.

 

  • Valuation. Maintain BUY recommendation and TP of RM1.66, based on Sum-of-Parts (SOP) valuation (refer to Financial Highlights table below). We remain optimistic about Samaiden’s prospects due to its (i) expertise in ground-mounted solar PV projects, (ii) lowest gearing ratio (0.05x as of FY24) among listed peers, and (iii) focus on bioenergy solutions, which differentiates it from other solar EPCC players.

                                          

  • Risks. Escalation in solar module costs. Heavy reliance on government initiatives. Intense market competition.

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Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

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