Samaiden Group Berhad - Below Expectations
Tue, 27-May-2025 06:55 am
by Tan Sue Wen • Apex Research

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SAMAIDEN (0223)

Target Price (RM)

1.600

Recommendation

Buy

  • SAMAIDEN’s 3QFY25 CNP rose 8.7% qoq and 4.5% yoy to RM4.3m, bringing 9MFY25 CNP to RM12.1m, which fell below expectations, accounting for 53% of our in-house forecast and 57% of market estimates. The shortfall was primarily due to lower-than-expected revenue recognition from CGPP projects.

  • Concurrently, SAMAIDEN announced that it has secured a RM100.7m EPCC contract for a 27.6MWac solar PV project under LSS5, spanning two years and two months with completion targeted by July 2027.

  • After incorporating recent contract wins, we estimate SAMAIDEN’s unbilled order book at ~RM696.1m, equivalent to 3.1x FY24 revenue.

  • Near-term order book replenishment is anticipated to remain robust, primarily fuelled by LSS5, with an estimated c.50% of EPCC project opportunities still unallocated. SAMAIDEN’s remaining LSS5 EPCC target stands at 8% to achieve a 10% share, which we believe is readily achievable following its recent 99.99MWac solar project win as a project developer.

  • Maintain BUY recommendation with a lower target price of RM1.60 (from RM1.71), based on sum-of-parts (SOP) valuation, and appraised with three-star ESG rating.

 

Below expectations. Excluding fair value gain on investment (-RM0.8m) and other adjustments (+RM0.1m), 3QFY25 core net profit (CNP) came in at RM4.3m, bringing 9MFY25 CNP to RM12.1m (+13.3% yoy). The result was below expectations, representing 53% of our estimates and 57% of market estimates respectively. The earnings miss was primarily attributable to lower-than-expected contribution in the EPCC division, mainly impacted by slower progresses from CGPP projects and slower growth in C&I projects.

 

qoq. 3QFY25 CNP grew by 8.7%, primarily due to greater contributions from the EPCC division, as evidenced by 11.4% surge in segmental revenue. Notably, the PBT margin declined 0.8%-pts qoq, which we believed was attributable to higher revenue contribution from lower-margin utility-scale solar EPCC projects and higher administrative costs.

         

yoy. 3QFY25 CNP rose by 4.5% yoy, likely due to higher contributions from electricity sales from solar plants (segmental revenue +232.7% from a low base), increased revenue recognition from EPCC projects (segmental revenue +18.7%).

 

LSS5 win. Concurrently, SAMAIDEN announced that it has secured an EPCC contract valued at RM100.7m from GVU Fajar Timur Sdn Bhd for a 27.6MWac large-scale solar photovoltaic (LSSPV) project in Pasir Mas, Kelantan. The project, part of the Large-Scale Solar 5 (LSS5) programme under Category 2 (10MWac to <30MWac), is set to take two years and two months scheduled for completion by July 2027. Assuming an 8% PBT margin, this could translate into an average annual PBT of RM4.1m, representing 11% of our forecasted Group PBT for FY25F. This marks SAMAIDEN’s second EPCC contract win under LSS5 this year, bringing the total to RM209.3m, which represents a 2% market share in terms of capacity for LSS5 EPCC contracts.

 

Outlook. We expect sustained qoq improvement in earnings in the upcoming quarter, supported by the accelerated growth phase of the S-curve for CGPP EPCC projects. Near-term order book replenishment is expected to be driven by LSS5, with an estimated 50% of EPCC project opportunities still unallocated. SAMAIDEN’s remaining LSS5 EPCC target stands at 8% to achieve a 10% market share or a capacity of 200MWac, which we believe is readily achievable. This confidence is reinforced by its recent award of a 99.99MWac solar project under LSS5 as a project developer. Incorporating recent contract wins, we estimate SAMAIDEN’s unbilled order book at ~RM696.1m, equivalent to 3.1x FY24 revenue, ensuring earnings visibility for the next three years.

 

Earnings revision. Post-results, we adjusted our CGPP project progress assumptions to reflect slower revenue recognition, with half of the revenue recognition projected to be recognised in FY26F. We also lowered our margin assumptions for utility-scale projects, anticipating compressed margins due to intensified competition. However, we maintained our order book assumption for the solar division at ~RM650m for FY25F, supported by a favourable energy transition outlook. Consequently, we reduced our FY25F–FY26F earnings forecasts by 20.5% and 26.4% respectively.

 

Valuation & Recommendation. Factoring in the earnings reduction, we maintain our BUY recommendation with a lower TP of RM1.60 (from RM1.71) based on sum-of-parts (SOP) and appraised with three-star ESG rating. We continue to favour SAMAIDEN for its (i) expertise in ground-mounted solar PV projects, (ii) industry-leading low gearing with a net cash position as of 3QFY25, and (iii) strategic focus on bioenergy solutions, which sets it apart from other solar EPCC players.

 

Risks. Increase in solar module costs. Inability to complete projects in time. Intense market competition.

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