A JS Solar-SAMAIDEN consortium has been awarded a RM100m EPCC job for a 50MWac solar power plant in Kulim Hi-Tech Park. This is SAMAIDEN’S second key job win in FY24, boosting its YTD job wins to RM75.8m and outstanding order book to RM427m. We raise our FY24-25F earnings forecasts by 6% and 2%, respectively, lift our TP by 1% to RM1.46 (from RM1.44) and maintain our OUTPERFORM call.

A consortium comprising JS Solar and SAMAIDEN has been awarded a RM100m EPCC job for a 50MWac solar power plant in Kulim Hi-Tech Park, with completion by Mar 2025, by NUR Renewables Sdn Bhd.

Assuming half share each, the latest contract will boost SAMAIDEN’s YTD job wins to RM75.8m, which has already exceeded our full-year assumption of RM50m. The job has also lifted its outstanding order book to RM427m, keeping it busy for at least the next 18 months. We anticipate a gross profit margin of 13%-16% for the job.

Meanwhile, its tender book stands at RM1.2b comprising EPCC jobs for LSS4/Corporate Green Power Programme (CGPP) projects (~c.40%), rooftop solar for the commercial and industrial segments (~c.30%), and stand-alone/off-grid solar power systems (~c.30%).

Outlook. SAMAIDEN’s long-term growth is well-supported by the National Energy Transition Roadmap (NETR) which sets an ambitious target of RE to make up 70% of total power generation capacity by 2050. Also, businesses in general, driven by commercial reasons (i.e. to save cost) and ESG considerations, have voluntarily invested in solar energy generation assets following the recent hikes in electricity tariffs.

Forecasts. We raise our FY24-25F earnings forecasts by 6% and 2%, respectively, as we now assume job wins of RM100m in FY24 (vs. RM50m previously). Our job win assumption of RM220m in FY25 is maintained.

Valuations. Consequently, we raise our TP by 1% to RM1.46 based on 30x fully-diluted FY25F EPS of 4.9 sen, in line with the average forward PER of peers such as SVLEST (Not Rated) and SUNVIEW (Not Rated). Our TP imputes a 5% premium given its 4-star ESG rating as appraised by us (see page 4).

Investment case. We continue to like SAMAIDEN for: (i) the bright outlook of the RE sector in Malaysia, underpinned by the government’s goal of RE making up 70% of total generation mix by 2050, (ii) the increased commercial viability of solar power projects on falling solar panel prices and the export potential of RE, (iii) its position as one of the top players in the local solar EPCC market, (iv) its ability to provide endto-end solutions, including financing, and (v) its proven track record in delivering projects on time and within budget. Maintain OUTPERFORM.

Risks to our call include: (i) the government dials back on RE policy, (ii) influx of new players in the EPCC space, intensifying competition, (iii) project execution risks including cost overrun and project delays, and (iv) escalating cost of inputs, particularly, solar panel and labour.

Source: Kenanga Research - 23 Jan 2024