Scores big in LSS5

Samaiden Group Berhad (SAMAIDEN) via wholly owned subsidiary Samaiden Sdn Bhd, has been shortlisted to develop a 99.99MWac solar PV plant under Package 3 (30MW-500MW category) of the Large-Scale Solar 5 (LSS5) auction cycle. The asset will be located in Pasir Mas, Kelantan and will be 100% owned by the group. SAMAIDEN will subsequently enter a Solar PPA with Tenaga Nasional Berhad for a term of 21-years. Commercial Operation Date (COD) is targeted by 11 October 2027, within the timeline set by the Energy Commission.

Largest asset win to-date

Samaiden Group Berhad (SAMAIDEN) via wholly owned subsidiary Samaiden Sdn Bhd, has been shortlisted to develop a 99.99MWac solar PV plant under Package 3 (30MW-500MW category) of the Large-Scale Solar 5 (LSS5) auction cycle. The asset will be located in Pasir Mas, Kelantan and will be 100% owned by the group. SAMAIDEN will subsequently enter a Solar PPA with Tenaga Nasional Berhad for a term of 21-years. Commercial Operation Date (COD) is targeted by 11 October 2027, within the timeline set by the Energy Commission.

Potential value accretion and double-digit earnings enhancement

We estimate capex for the LSS5 project at RM315mn based on RM3.2mn/MWac project cost. At PIRR of mid to high single digit and WACC of 5%, the LSS5 asset is estimated to enhance our SOP valuation by RM143mn (26sen/share) and contribute an average net profit of RM11mn per annum throughout the life of the PPA. Earnings from the LSS5 asset is only expected to trickle in from FY28F onwards but to put things into perspective, it is estimated to enhance the group’s bottomline by +28% on full year basis if compared against our FY27F earnings estimate

Heavy capex but manageable

The LSS5 project capex of RM315mn looks heavy and is likely to turn SAMAIDEN into a net gearing position (from net cash currently) but the LSS5 asset is likely to be project-financed with no recourse to the holding company. At estimated equity capex of RM63mn, we reckon project funding is manageable considering SAMAIDEN’s FY27F gross cash of RM138mn (gross cash as at end1QFY25: RM126mn).

Potential EPCC boost from LSS5 projects

To recap, the LSS5 cycle auctions out a total 2000MW of solar capacity, a record high which translates into an estimated EPCC value of RM6.0-7.0bn. SAMAIDEN has set its sight on securing at least a 10% share of LSS5 EPCC jobs – if successful, this could more than double its existing orderbook of RM521mn, which is already a record high. Given the single offtaker nature of the LSS5 program, we reckon EPCC contract awards could start trickling in as early as mid-CY25.

Impact

No change to FY25F-27F earnings but as mentioned above, the LSS5 asset is estimated to contribute an average RM11mn per annum to bottomline from FY28F onwards (+28% against FY27F net profit).

Recommendation

Re-affirm Buy on SAMAIDEN at a higher TP of RM1.69 (from RM1.43 previously) as we factor in the upcoming LSS5 asset into our valuation. RE assets now contribute 29% to our SOP valuation with the majority 71% still consisting of the group’s EPCC business. We continue to like SAMAIDEN as one of the prime beneficiaries of an upcycle in RE plant-up underpinned by record high orderbook, a strong balance sheet and a secured pipeline of RE assets to boost recurring income.

From a valuation standpoint, SAMAIDEN is trading at just 16.6x FY26F PER (FYE June), at a discount to historical mean PER of 20x. We see room for valuations to re-rate higher towards +1SD (25x PER) on the back of more aggressive RE plant-up domestically backed by the National Energy Transition Roadmap and an increasingly liberalised domestic RE market.

Key catalysts: (1) Further award of CGPP EPCC contracts. (2) LSS5 EPCC contract awards. (3) CRESS EPCC contract awards. Key risks are a sharp rise in raw material cost such as solar module and delays in project implementation.

Source: TA Research - 2 Jan 2025