KEY INVESTMENT HIGHLIGHTS

• Enters JV with PT MCS Bina Energi to tap on Indonesia's RE market
• Samaiden to hold 70% stake in JV; to provide RE technical knowledge and advisory
• Some projects have been identified in Indonesia; some already in discussion stage
• Maintain BUY with an unchanged TP of RM1.57

Tapping the Indonesian market. Samaiden is planning to expand down south to Indonesia to tap on the rapidly expanding renewable energy (RE) market there. Samaiden's entry into Indonesia will be done via a joint venture (JV) arrangement between its wholly owned subsidiary Samaiden SG Pte Ltd and PT MCS Bina Energi (MCS).

JV terms. Samaiden SG and MCS entered into an agreement yesterday to establish a JV company in Indonesia, which will see Samaiden holding a 70% stake and MCS with the remaining 30% stake. The proposed authorised capital shall be IDR10b (RM2.8m) whereby the capital injection will be executed progressively depending on cash flow requirements.

Nature of business. The JV company will be involved in EPCC and investment of solar PV systems and power plants, RE and environmental and consulting services, operation and maintenance services and build-own-operate-transfer RE facilities in Indonesia. The JV arrangement will see Samaiden focussing on providing RE technical knowledge and advisory while MCS shall source and identify potential business opportunities in Indonesia.

Strong replenishment prospects. Management is currently identifying some projects in Indonesia, some of which are already in the midst of discussion. Samaiden's outstanding order book currently stands at RM313.5m. In Malaysia, prospects remain bright for replenishment given the upcoming EPCC tenders for the 800MW quota allocated under the Corporate Green Power Program (CGPP). We understand that Samaiden is eyeing at least 100MW of EPCC jobs for CGPP, which translates into a potential RM300-400m incremental orderbook.

Earnings estimates. We are maintaining our earnings estimates unchanged.

Recommendation. We are positive on Samaiden's proposed entry into Indonesia, where management has identified huge potential for off-grid solutions and from the relocation of the capital to Nusantara. We maintain our SOP-derived TP of RM1.57. We continue to value the group's EPCC business at 26x PER, at a slight discount to industry leader Solarvest. We maintain our BUY call on Samaiden being one of the key beneficiaries of EPCC prospects under the CGPP and the long-term RE growth potential from the National Energy Transition Roadmap. The balance sheet remains strong with a net cash position of RM122.3m, underpinning near-term growth prospects.

Source: MIDF Research - 18 Sep 2024