• Still BUY, new MYR1.33 SOP TP (from MYR1.58), 22% upside, c.1% FY25F (Jun) yield. Samaiden Group's FY24 earnings met expectations, supported by better margins despite lower revenue recognition. We stay positive on the group’s outlook, driven by opportunities in renewable energy (RE) initiatives. Our TP is lowered as we exclude biomass EPCC earnings (40% of orderbook) due to delays, as the project owners have not finalised financial terms.

• FY24 core earnings of MYR16m (+55.3% YoY) were in line, at 97% of our forecasts and 104% of consensus’. The 33% YoY increase in revenue to MYR227.2m was driven by the 50MW Large-Scale Solar 4 (LSS4) and 50 MW Kulim Hi-Tech Park (KHTP) contracts. Earnings were further boosted by stronger margins, with NPM rising to 7.1% from 6.0% in FY23. While 4QFY24 revenue fell 23.7% QoQ to MYR57.2m due to the near completion of most LSS4 projects, this was mitigated by a higher GP margin (which doubled to 22.8%), aided by the easing USD. Samaiden declared a 0.7 sen dividend, which was a pleasant surprise. Moving forward, we factor in a 25% payout ratio, as the group has paid dividends for two consecutive years.

• Outlook. As of Mar 2024, its orderbook stood at MYR313.5m, which is 11.5% below the previous quarter’s MYR354.3m, as LSS orders were recognised. The orderbook breakdown is 40% biomass, 30% utility-scale solar, and 20% commercial & industrial (C&I) solar, while the rest comprise mini hydro and other projects. We anticipate near-term orderbook replenishment from the Corporate Green Power Programme (CGPP). Samaiden is well-positioned to benefit from an influx of projects from the remaining 450MWac KHTP solar projects, and from the National Energy Transition Roadmap (NETR), LSS5, and TBB. New initiatives such as the Cross-Border Electricity Supply (CBES) and Corporate Renewable Energy Supply Scheme (CRESS) should also provide substantial opportunities, particularly in the EPCC space.

• We cut FY25-26 earnings forecasts by 19% and 10.7% as we remove biomass EPCC earnings on prolonged delays, as the project owner is still in the process of resolving financing terms. We introduce FY27 forecasts on the assumption of a 200MW orderbook replenishment from utility scale projects, supported by government initiatives to increase the RE mix. We raise our SOP TP (Figure 2). 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). We have yet to include the CGPP asset pending finalisation of Samaiden’s stake. Our TP includes a 6% ESG premium. Key risks: Discontinuation of solar incentives, competition risks, and higher-than-expected project costs.

Source: RHB Research - 30 Aug 2024