Investment Highlights

• Solar energy proxy. Samaiden Group Berhad (Samaiden)’s revenue is mainly generated from Engineering, Procurement, Construction and Commissioning (EPCC) (98.0%), RE and Environmental Consulting Services (2.0%). Its listing would present a good opportunity for solar and renewable energy play.
   
• Robust pretax profit compound annual growth rate (CAGR). We expect a 2-year pretax profit CAGR of 32.8% on the back of potential strong orders from LSS@MEnTARI which is expected to award to successful bidders in end of CY2020.
   
• Net cash position. Samaiden has been sitting at a net cash position since FY2017. Moving forward, the Group plans to raise RM29m from equity market which bodes well for the Group in future expansion with its negligible debt and minimal finance cost.
   
• Healthy orderbook. As of 30 Sept 2020, Samaiden’s orderbook stood at RM31.35m. Meanwhile, the Group is actively bidding jobs from Large Scale Solar Photovoltaic (LSSPV) Plant 3 and LSS@MEnTARI projects over the months to ensure the sustainability of orderbook. Samaiden is set to benefit greatly from the c.RM4 billion LSS@MEnTARI project, judging from its solid track records in LSSPV 1 & 2. We believe government will scrutinise the job bidders’ background closely and to prioritise the projects to companies with majority local shareholdings. 

• Favourable industry outlook. Demand for solar PV system is anticipated to grow as the cost of global PV value chain pricing has been on a downtrend, allowing the market to enjoy low cost of solar PV system in this technology maturing cycle. The estimated total installed capacity in Malaysia (MWp) is expected to grow at a CAGR of 50% from 438 in 2018 to 3,322 in 2023.
   
• Government initiatives to spur green energy. Malaysia has been actively participated in the solar industry with many policies being introduced such as the Green Investment Tax Allowance (GITA) and Green Income Tax Exemption (GITE) incentives until 2023 extension was tabled in Budget 2020, along with 70% income tax exemption of up to 10 years

Source: JF Apex Securities Research - 7 Oct 2020