SAMAIDEN has secured a RM52m EPCC contract with a capacity of 14MWac under the Corporate Green Power Programme (CGPP) in Kedah. This is the first key job win in FY25, boosting its outstanding order book to RM365.5m and it is on track to achieve its FY25 job win target of RM210m. We maintain our forecasts, TP of RM1.51 and OUTPERFORM call.

SAMAIDEN has secured a RM52m EPCC contract from Legasi Green Power Sdn Bhd to develop a 14MWac large-scale solar power plant under CGPP in Sungai Petani, Kedah. The project is expected to be completed by 3QCY25.

We view this latest contract win as a positive development, aligning with our RM210m full-year contract win assumption. This job boosts its outstanding order book by 17% to RM365.5m. Given that CGPP projects typically offer higher project IRR, we expect a gross profit margin in the range of 14%-16%.

In the immediate term, we expect a strong influx of job opportunities driven by the 800MW CGPP with an end-2025 completion deadline and an additional 500MW quota under the NEM initiative. Based on our estimates, we expect SAMAIDEN to stand a strong chance to secure around 10%, translating to RM240m of the total PV system EPCC jobs under CGPP which we estimate at RM2.4b.

Forecasts. Maintained.

Valuations. We also maintain our TP of RM1.51 based on SoP valuation, valuing its EPCC segment at 30x fully-diluted FY25F EPS of 4.9 sen, in line with the average forward PER of peers such as SVLEST (OP; TP: RM1.47) and SUNVIEW (Not Rated) and DCF for its CGPP and biomass assets. 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 end- to-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 - 2 Oct 2024