Samaiden Group Berhad - Growth Remains On Track
Thu, 27-Feb-2025 11:58 am
by Tan Sue Wen • Apex Research

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SAMAIDEN (0223)

Target Price (RM)

1.710

Recommendation

Buy

Summary

  • Samaiden’s 2QFY25 CNP rose 0.9% qoq and 17.1% yoy to RM3.9m, bringing 6MFY25 CNP to RM7.9m (+18.8% yoy). We deem it as within expectations, despite accounting for only 39.6% of our forecast and 36.5% of consensus estimates. We expect a stronger 2HFY25 ahead, driven by higher billings from on-going from EPCC job for CGPP projects.

  • Prospects are strong underpinned by clear RE initiatives, for solar farm LSS5, LSS5+ and LSS6, with an estimated RM17bn in EPCC job opportunities over the next two years.

  • Maintain BUY recommendation with an unchanged target price of RM1.71, based on a sum-of-parts (SOP) valuation, and appraised with a three-star ESG rating.

 

Within expectations. Samaiden reported a 2QFY25 CNP of RM3.9m (+0.9% qoq, +17.1% yoy), bringing the 6MFY25 total to RM7.9m (+18.8% yoy), which accounts for 39.6%/36.5% of our/consensus full-year forecasts. We deem the results to be within expectations, as the 2H will see much better earnings from higher contributions of ongoing EPCC jobs for CGPP projects, which are set to meet the tight COD by the end of 2025. Note that CNP has been adjusted for a FV gain of RM0.7m from short-term investments and a forex gain of RM0.1m

 

qoq. 2QFY25 CNP grew marginally by 0.9% qoq despite a significant 62.1% improvement in revenue driven by EPCC projects. However, margin compression from the lower-margin EPCC projects offset the revenue growth. As a result, the CNP margin declined by 3%-pts to 4.9%.

 

yoy. 2QFY25 CNP grew by 17.1% yoy, likely due to higher contributions from electricity sales from solar plants (revenue +295.1% from a low base) and increased progress billing from EPCC projects (revenue +63.7%). CNP margin decreased by 2.0%-pts due to higher contribution from lower-margin EPCC projects

 

Outlook. RE prospects remain bright, supported by clear RE initiatives that have been introduced, including an additional 450MW quota under NEM, an extended rebate of RM4k/kWac under the Solar For Rakyat Incentive Scheme (SolaRIS), LSS5+ with a 2GW quota, CREAM (rooftop lease program), BESS program with a total capacity of 400MW/1,600MWh, and the planned rollout of LSS6. Considering Samaiden's expertise in solar farms, assuming a 2GW capacity allocation for LSS6, the combined impact of LSS5, LSS5+ and LSS6 could translate into an estimated RM17bn in EPCC jobs, putting Samaiden in a strong position to expand its order book over the next two years. Note that Samaiden secured around a 15% market share of EPCC jobs in the past LSS cycles. As of 31 Dec 2024, Samaiden’s unbilled order book stood at RM515.7m (54% from solar farm, 25% from biomass, 20% from C&I and remainder from others), equivalent to 2.3x its FY24 revenue of RM227.2m.

 

Earnings revision. No change to our earnings forecasts.

 

Valuation. We maintain our BUY recommendation with an unchanged TP of RM1.71 based on sum-of-parts (SOP) and appraised with three-star ESG rating. We like Samaiden for its (i) expertise in ground-mounted solar PV projects, (ii) industry-leading low gearing ratio of 0.12x as of 2QFY25, and (iii) strategic focus on bioenergy solutions, which sets it apart from other solar EPCC players.

 

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

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