Samaiden Group Berhad - Below Expectations
Fri, 29-Aug-2025 09:20 am
by Tan Sue Wen • Apex Research

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SAMAIDEN (0223)

Target Price (RM)

1.35

Recommendation

Buy

  • 4QFY25 CNP came in at RM4.4m (+0.9% QoQ, -4.3% YoY), bringing FY25 CNP to RM16.7m (+8.8% yoy). The full-year result came in below expectations, accounting for 91% of our forecast and 83% of consensus. The earnings shortfall was mainly attributable to slower-than-expected progress recognition from utility-scale EPCC projects.

  • Following the earnings miss, we revised downward our earnings forecast for FY26F by 29.4%, we have also introduced FY27F CNP of RM24.7m.

  • Additionally, SAMAIDEN announced that it has secured a RM290m EPCC contract for a 95MWac LSS5 solar PV project with works set to commence on 28 August 2025, bringing its unbilled orderbook to ~RM699.2m.

  • Maintain BUY with a lower target price of RM1.35 (from RM1.60), based on a sum-of-parts (SOP) valuation and supported by a three-star ESG rating.

 

Below expectations. Excluding fair value gain on investment (-RM1.3m) and unrealised gain on foreign exchange (-RM1.4m), 4QFY25 core net profit (CNP) came in at RM4.4m, bringing 12MFY25 CNP to RM16.7m (+8.8% yoy). The result was below expectations, representing 91% of our estimates and 83% of market estimates. The earnings miss was primarily due to lower-than-expected contribution from the EPCC division, mainly impacted by slower progress from utility-scale projects.

 

QoQ. 4QFY25 CNP grew marginally by 0.9% to RM4.4m, despite topline surging 51.3% to RM135.0m. The muted earnings growth was mainly due to new and ongoing utility-scale solar EPCC projects, which were still in the early billing phase of the S-curve at thinner margins. Additionally, administrative expenses (+88.9%) also climbed sharply while the effective tax rate fell to 15.6% (vs 24% Q3FY25) from non-taxable unrealised forex gains and fair value gains on short-term investments.

         

YoY. 4QFY25 CNP fell 4.3% to RM4.4m, mainly due to similar factors as outlined in the QoQ analysis. Most utility-scale solar EPCC projects remained in the transition phase of the S-curve with thinner margins. As a result, 4QFY25 CNP margin contracted by 4.8-pts to 3.3% compared with 8.1% in the previous corresponding quarter.

 

LSS5 win. SAMAIDEN announced that it has secured an EPCC contract valued at RM290m from Unique HEB Energy for a 95MWac LSSPV project in Hilir Perak, Perak. The project is set to commence following the signing of the LOA on 28 August 2025, with formal EPCC agreements expected to be executed within 60 days of acceptance. We believe the project will be required to achieve COD by end-2027, in line with Suruhanjaya Tenaga (ST) guidelines. Assuming an 8% PBT margin, this translates into an estimated total PBT of c.RM23.2m over the 28-month execution period. This marks SAMAIDEN’s third EPCC contract secured under LSS5 in FY25, lifting total YTD wins to RM435.7m and expanding its market share to 6.6% in terms of capacity for LSS5 EPCC contracts. Financing is not expected to be an issue, given SAMAIDEN’s net cash position as at 4QFY25. However, we believe execution risks remain. Market experts suggest solar panel prices could rise towards end-2025, following China’s anti-involution campaign to curb oversupply, which may impact project execution if prices exceed the agreed contract sum under fixed-cost EPCC arrangements.

 

Outlook.Incorporating its recent wins, SAMAIDEN has achieved a 6.6% market share in LSS5 EPCC. We expect near-term order book replenishment from LSS5, where EPCC contracts are typically awarded to contractors about six to nine months after the LSS awards to developers, once financial close has been achieved. We believe the 10% market share target in LSS5 and LSS5 EPCC remains achievable, supported by SAMAIDEN's proven track record in utility-scale projects and a robust balance sheet with RM896m available under the Sukuk Wakalah programme to scale up its position. Following these contract wins, SAMAIDEN’s unbilled order book stands at ~RM699.2m, which is equivalent to 2.0x FY25 revenue, ensuring earnings visibility for the next two years.

 

Earnings revision. Post-results, we adjusted our assumptions for the progress of utility-scale projects to reflect slower revenue recognition. We also lowered our order book assumption for utility-scale projects in FY26F to RM500m from a previous RM650m, adopting a conservative stance in view of potential execution risks from rising panel prices. Consequently, we reduced our FY26F earnings forecast by 29.4%. We also introduced a FY27F CNP of RM24.7m.

 

Valuation & Recommendation. Factoring in the earnings reduction, we maintain our BUY recommendation with a lower TP of RM1.35 (from RM1.60), based on a SOP valuation and appraised with a 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 4QFY25, 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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