SAMAIDEN has emerged a big winner in the latest Corporate Green Power Programme (CGPP) award round, securing a total capacity of 43.32 MWac. The CGPP offers higher tariff rates and ushers in a new EPCC order book replenishment cycle (c. RM2.4b) for EPCC players. We raise our FY24F and FY25F net profit by 2% and 10% respectively, lift our TP by 8% to RM1.80 (from RM1.67) and maintain our OUTPERFORM call.

A slice of action in CGPP. SAMAIDEN has emerged a big winner in the latest round of awards of solar power generation capacity under the CGPP. It has won a total of 43.32 MWac comprising 13.42 MWac on its own and 29.9 MWac via a consortium. In the latest round of awards, Energy Commission (EC) announced ten winners with a total capacity of 236.58 MWac, with plant capacity ranging from 10 MWac to 30 MWac. (see Exhibit 1).

A higher return. We believe the CGPP offers higher return vs. LargeScale Solar (LSS) programme, as the CGPP uses a willing-buyerwilling-seller model vs. an open bidding model under the LSS programme. We anticipate a higher tariff in the range of 25-28 sen/kWh, vs. 17-24 sen/kWh under the LSS4 programme. Coupled with the softening panel prices, we believe the IRR for the CGPP could be in the low-to-mid-teens, vs. 8%-10% under the LSS programme.

RM2.4b EPCC jobs for EPCC players. The CGPP also ushers in a new order book replenishment cycle for EPCC players. This is particularly critical given that EPCC jobs for projects under the LSS4 programme will tail off towards end-2023. Based on our estimates, the CGPP will generate RM2.4b worth of EPCC jobs and will keep EPCC players busy until end-2025.

Forecasts. We raise our FY24F and FY25F net profit by 2% and 10%, respectively, assuming SAMAIDEN is to secure 15% of total EPCC jobs under the CGPP.

Correspondingly, we raise our TP by 8% to RM1.80 (from RM1.67) based on 30x FY25F PER, in line with the average forward PER of peers such as SVLEST (Not Rated) and SUNVIEW (Not Rated). Note that our TP reflects a 5% premium given its 4-star ESG rating as appraised by us (see page 5).

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 - 10 Nov 2023