SAMAIDEN has bagged a RM25.8m EPCC job for a 2MWac highhead hydropower plant in Terengganu. This is its first key contract secured in FY24, boosting its FY24 YTD job wins to RM25.8m and outstanding order book to RM377m, which can keep it busy for at least over the next 18 months. We maintain our forecasts, TP of RM1.44 and OUTPERFORM call.

SAMAIDEN has been awarded by Tesdec Hydropower Sdn Bhd a RM25.8m EPCC job for a high-head hydropower plant in Terengganu (In a high-head hydropower plant, the water comes from a high elevation, which means a smaller amount of water can produce an equivalent amount of energy). The contract period is 36 months from the site possession date on 30 Jun 2024.

This is SAMADEN’s first key contract secured in FY24, boosting its FY24 YTD job wins to RM25.8m (vs. our full-year assumption of RM50m) and outstanding order book to RM377m which can keep it busy for at least over the next 18 months. We anticipate a gross profit margin of 14%-17% from this job.

Recall, SAMAIDEN recently won the rights under the Corporate Green Power Programme (CGPP) to develop 13.42 MWac of generation capacity on its own and 29.9 MWac via a consortium where it holds a minority stake. These two projects alone will generate EPCC works worth about RM170m to SAMAIDEN based on our estimates.

Outlook. SAMAIDEN’s long-term growth is well-supported by the National Energy Transition Roadmap (NETR) as announced by the government which sets an ambitious target of RE to make up 70% of total power generation capacity by 2050. Also, businesses, driven by commercial reasons (i.e. to save cost) and ESG considerations, have voluntarily invested in solar energy generation assets following the recent hikes in electricity tariffs.

Forecasts. Maintained.

We also maintain our TP of RM1.44 based on 30x fully-diluted FY25F EPS of 4.8 sen, in line with the average forward PER of peers such as SVLEST (Not Rated) and SUNVIEW (Not Rated). Our TP imputes a 5% premium given its 4-star ESG rating as appraised by us (see page 4).

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 - 14 Dec 2023