SAMAIDEN’s FY22 results met expectations. Its FY22 core net profit more than doubled YoY as it worked on a higher number of projects. Solar EPCC players, SAMAIDEN included, will continue to ride on the accelerated RE adoption in Malaysia. We maintain our FY23F earnings (and introduce our FY24F numbers). We raise our TP by 16% to RM0.86 (from RM0.74) after rolling forward our valuation base year to FY24F. Maintain OUTPERFORM.

Within expectations. FY22 core net profit of RM12.4m came in within our forecast and the consensus estimate.

FY22 core net profit more than doubled YoY as it worked on a higher number of projects, though partially dented by a slightly lower blended margin diluted by large-scale solar (LSS) jobs that typically command lower margins vs. commercial and industrial jobs.

Outlook. Malaysia’s renewable energy (RE) space is largely dominated by solar. We foresee >90% of upcoming new RE capacity to be solar-powered. Anchored by continued government-led programmes, Malaysia is targeting RE to make up 31% of total power generation capacity by 2025, and 40% by 2035. SAMAIDEN currently has an orderbook of RM358m, which will keep it busy for the next three years.

Forecasts. We keep our FY23F earnings and introduce our FY23F numbers.

We like SAMAIDEN for its: (i) huge market share – second largest in the high-growth local solar EPCC market, (ii) ability to provide end-to-end services, including securement of financing – of which many smaller names are unable to do so, and (iii) outstanding track record of project execution and delivery within the space. We maintain our FY23F earnings (and introduce our FY24F numbers). We raise our TP by 16% to RM0.86 (from RM0.74) as we roll forward our valuation base year to FY24F. Our revised TP is based on 15x FY24F PER, in line with the valuation of SLVEST, the only other Bursa-listed pure-play solar EPCC peer. Our TP also reflect a 5% premium to a 4-star ESG rating as appraised by us (see Page 4). Maintain OUTPERFORM.

Risks to our call include: (i) the government dials back on RE policy, (ii) project execution risks including cost overrun and project delays, and (iii) the escalating cost of inputs, particularly, solar panel and labour.

Source: Kenanga Research - 1 Sept 2022