• Keep BUY and MYR1.55 TP, 36% upside. Samaiden Group has landed a joint MYR100m solar EPCC contract for the development of a 50MWac ground-mounted solar photovoltaic (PV) plant. The national push towards renewable energy, coupled with Samaiden's proven track record and expanding offerings, promises significant growth and opportunities for the group.

• 50MWac EPCC project. Samaiden and consortium member JS Solar have been awarded a MYR92m EPCC contract by NUR Renewables (NUR), which comes with a MYR8m optional items price. This is a smaller contract value as the solar modules will be free-issued by NUR. The contract is for the development of a 50MWac ground-mounted solar power plant at Kulim Hi-Tech Park (KHTP) in Kedah where NUR is the sole independent power utility with exclusive rights. This is the first phase of the 500MWac solar project to be developed in collaboration with UEM Lestra, UEM Group’s green energy arm. Management guided that Phase 2 (another 50MWac) will be in the near term, as the land for it has been identified.

• Estimated gross orderbook of c.MYR440m following the latest contract win. However, the final stake of this contract has yet to be finalised. Note: The estimated orderbook includes the group’s first hydropower project valued at MYR25.8m, which was secured in Dec 2023. Margins are guided to be similar to other solar projects (generally 15-20% GPM). For the project’s commencement of construction, it is subject to the issuance of the notice to proceed by NUR, whereas the completion of the PV power plant is expected to be in 1Q25. Moving forward, we anticipate stronger contract flows coming from the Corporate Green Power Programme or CGPP, the remaining 450MWac KHTP solar project, and development of the National Energy Transition Roadmap or NETR, eg Tenaga Nasional’s (TNB MK, BUY, TP: MYR11.80) 30MW floating solar initiative.

• We maintain our earnings estimates on Samaiden, given that the contract win is within our orderbook replenishment assumption. Hence, our SOP-derived TP is kept at MYR1.55, pegged to 24x FY24 P/E, ie at a 20% discount to Solarvest’s (SOLAR MK, BUY, TP: MYR1.53) c.30x – on account of the latter’s larger asset base and bigger regional presence – and DCF (WACC: 7.8%) on the group’s 60% biogas asset. Our TP includes a 6% ESG premium based on its 3.3 ESG score, which is above the country median.

• Downside risks include discontinuation of solar incentives, competition risks, and higher-than-expected project costs.

Source: RHB Securities Research - 23 Jan 2024