SAMAIDEN has bagged a RM39.17m EPCC contract for a 10MWac solar power plant under the Corporate Green Power Programme (CGPP) in Negeri Sembilan. This marks its second major contract in FY25, bringing its YTD job wins to RM91.17m and lifting its outstanding order book to RM404.67m, which should keep the company busy for at least the next 18 months. We maintain our forecasts, TP of RM1.51 and OUTPERFORM call.

SAMAIDEN has bagged a RM39.17m EPCC contract from Bahau Power Sdn Bhd for a large-scale solar power plant in Bahau, Negeri Sembilan. The contract is set for a 12-month duration, starting from the site possession date on 2 October 2024.

This is SAMADEN’s second key contract secured in FY25, boosting its FY25 YTD job wins to RM91.17m (vs. our full-year assumption of RM210m) and outstanding order book to RM404.67m which can keep it busy for at least over the next 18 months. We anticipate a gross profit margin of 15%-16% from this job.

In the immediate term, we expect a strong influx of job opportunities driven by the 800MW CGPP with an end-2025 completion deadline, having already seen ~RM690m contract awards under this programme announced by listed firms over the past three months, as well as 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: RM1.91) 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 solar panels although unlikely amid US slapping tariffs on Southeast Asian manufactured solar panels.

Source: Kenanga Research - 3 Oct 2024