• Still BUY, new MYR1.76 TP (SOP) from MYR1.46, 29% upside. We remain optimistic on Samaiden Group's prospects, driven by its extensive pipeline and solid position in the renewable energy (RE) sector. With a diversified portfolio comprising solar, biogas, and biomass, it strategically positions itself as a significant contributor to Malaysia's sustainable energy initiatives.

• Recognising Large-Scale Solar (LSS) 4 orders by FY24 (Jun). As firmly stated by the Energy Transition & Water Transformation Ministry or PETRA, no LSS4 commercial operation date (COD) extensions will be granted – meaning project developers are now accelerating efforts to reach their CODs. Consequently, the impending recognition of Samaiden’s LSS4 EPCC orders, which it guides to be fully realised by June, is expected to significantly boost 2HFY24 earnings. As at Dec 2023, Samaiden’s orderbook stood at MYR358.2m – excluding the MYR440m Kulim Hi-Tech Park (KHTP) contract – with c.35% or MYR125.4m coming from LSS4 orders.

• A busy FY25. Samaiden recently experienced a momentum surge, steadily securing RE contracts one after another: The group bagged two EPCC contracts – a 50MW ground mounted solar photovoltaic (PV) plant at KHTP and a 2MW small hydro facility at the Pelagat Forest Reserve in Terengganu. Moreover, it managed to secure a gross total of 43.32MW capacity under the Corporate Green Power Programme (CGPP) and a 7MW biomass power purchase agreement or PPA under the Feed-in Tariff (FiT) scheme. We expect these to start in 2HCY24, providing earnings visibility for the upcoming year.

• RE initiatives to replenish orderbook. Further bolstering Samaiden's FY25 activities will be upcoming CGPP tenders, which are set to gain traction in the next few months. The tenders have been slower than anticipated, reportedly over a Newly Enhanced Dispatch Agreement or NEDA requirement, according to industry players' guidance. Other programmes to fuel Samaiden’s growth will be the much talked about National Energy Transition Roadmap or NETR and recently announced Integrated Clean Energy or TBB programme, which features the LSS5 (application timeframe 1 Apr-25 Jul 2024). The group’s recent CGPP win may help it for the LSS5 application, however, the categories it targets are likely to favour companies capable of applying for larger quotas given the 500MW capacity limit.

• Earnings estimates are maintained. Our TP is revised up to MYR1.76 as we roll forward our base year to FY25. Our SOP valuation comprises: i) 24x FY25F P/E on EPCC earnings, (ii) DCF (WACC of 7.8% for its 60%-owned biogas asset), and iii) DCF (WACC of 7.8% for its biomass asset). There is potential upside to our TP, which is linked to its CGPP assets – we have yet to factor this in, given its net MW capacity is pending finalisation. Our TP includes a 6% ESG premium based on the 3.3 ESG score, which is above the 3.0 country median. Downside risks include a discontinuation of solar power incentives, competition risks, and higher-than-expected project costs.

Source: RHB Research - 8 Apr 2024