Samaiden Group Berhad - Post-results briefing takeaways
Wed, 05-Mar-2025 06:57 am
by Tan Sue Wen • Apex Research

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SAMAIDEN (0223)

Target Price (RM)

1.710

Recommendation

Buy

Summary

  • Samaiden aims to add 15-20MW/year in rooftop PPAs, targeting 10% recurring income by 2027.

  • Strong growth prospects, backed by an RM1.8bn tender book (80% solar-focused), including LSS5+ and a 100MW/400MWh BESS project. Targeting 10% market share in LSS5+, combined impact from LSS5 could result in potential capacity gains of up to 200MW.

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

 

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

 

Scaling up rooftop PPAs to strengthen recurring income. Samaiden is aiming additional 15-20MW/pa in rooftop PPAs, to hit a 10% recurring income target by 2027. Currently, the Group’s total RE capacity stands at about 153.7MW, comprising: LSS5 (100MW), CGPP (43.3MW), Biomass (7MW), Biogas (1.2MW) and rooftop solar assets (c.1.2MW). Assuming all assets are operational by 2027 (excluding the additional 15-20MW/year), Samaiden could generate c.RM55m in recurring revenue, equivalent to 10% of our FY27F target, aligning with the Group’s internal target of 10.0% recuring income. We see this as a strategic move, given that rooftop PPAs tend to deliver higher IRRs, typically at double digits as compared to LSS projects which yield single digit returns. Execution risk remains minimal, thanks to Samaiden’s low gearing ratio of 0.12x (as of 31 Dec 2024), keeping financial flexibility well in check.

 

Strong pipeline with RM1.8bn in tenders. Samaiden’s total tender book stands at RM1.8bn, with up to 80% allocated to solar-related projects. This includes LSS5+ and development of a 100MW/400MWh BESS, for which the Group submitted a RFQ last month. With a Capex estimate of RM5m/MW for BESS, the total project value could reach RM500m. Given the high investment required, we anticipate Samaiden will engage in strategic partnerships to share the cost burden. With a proven track record in utility-scale solar and disciplined execution, Samaiden is well-positioned to secure an allotment. On the EPCC front, the Group aims to maintain a 10% market share in LSS5+ contracts, mirroring its target in LSS5. With the combined impact of 2GW under LSS5, this could translate RM11.6bn potential order replenishment, ensuring a robust project pipeline over the next two years. With the Group’s historical track record of securing 15% market share in past LSS cycles and expertise in ground-mounted solar, we reckon the goal remains well within reach.

 

Short-term caution, long-term optimism. The government has recently revised key conditions under the SELCO program, including i) exempting the requirement for installing a BESS across all categories until 31 Dec 2025, and ii) reducing the standby charge from RM14/kWp to RM12/kWp for capacities > than 1MWp. Management noted that near-term client sentiment remains cautious, with many opting for installations below 1MWp to avoid the BESS requirement. However, over the long run, the reduced standby charge improves project viability, making larger installations more attractive. Industrial players with high energy demands will likely continue choosing >1MWp systems, as solar remains cost-effective compared to fuel, even with a slightly extended payback period.

 

Expect growing interest in CRESS as price gap narrows. Samaiden has garnered growing interest from DC operators regarding the CRESS framework, though many offtakers remain cautious, as its tariffs are currently less competitive than the Green Electricity Tariff (GET). However, management expects momentum to shift in 2H25, when TNB’s RP4 revision takes effect, triggering a 14.2% tariff hike. To enhance market adoption, several key conditions have been revised, including i) existing electricity consumers can now participate without requiring additional or new demand, and ii) SAC will be reviewed every three years, with a 15% cap on adjustments per regulatory period. These refinements position CRESS as a more viable option for offtakers. Meanwhile, Samaiden also remains highly selective in signing offtakers, prioritising long-term contracts (minimum 10 years) to ensure financial stability and risk mitigation.

 

FiT 2.0 tariff restructuring enhances project viability. Management has outlined FiT 2.0’s two-phase structure, designed to improve financial feasibility. The first 10 years will follow a fixed base tariff, while the second phase allows eligible companies to bid within SEDA’s predefined tariff floor and ceiling for the remaining 11 years. This marks a significant improvement over FiT 1.0, as it introduces flexibility for tariff adjustments beyond the initial period, making projects more financially sustainable. Management sees this as a positive step forward, expecting increased industry interest and stronger investment momentum in RE.

 

Orderbook. As of 31 Dec 2024, Samaiden’s unbilled order book stood at RM515.7m (59% from solar farm, 18% from biomass, 22% from C&I and remainder from others), equivalent to 2.3x its FY24 revenue of RM227.2m.

 

Earnings revision. No earnings adjustment.

 

Valuation & Recommendation. 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. Inability to complete projects in time. Intense market competition.

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