• Reiterate BUY with MYR1.33 TP (SOP), 12% upside, c.2% FY25F (Jun) yield. Samaiden Group's 1QFY25 results broadly met expectations. We expect to see stronger quarters ahead, with the progress of its newly-awarded Corporate Green Power Programme (CGPP) contracts. Furthermore, its robust orderbook of MYR521.2m and the country’s commitment in advancing the energy transition agenda should further support the group’s earnings growth.

• 1QFY25 core earnings came in at MYR3.3m (-42.5% QoQ, +18.7% YoY), broadly in line with expectations, accounting for 14% and 16% of our and Street’s earnings forecasts. We consider this to be in line as 1Q is seasonally softer, with stronger contributions anticipated in 2HFY25 from its CGPP contracts. The group saw a significant QoQ earnings decline due to lower revenue, following the completion of its 50MW Large-Scale Solar 4 (LSS4) project in the previous quarter, coupled with a margin compression driven by the preceding quarter's higher-margin projects and weaker USD. Samaiden declared a 1.5 sen dividend for the quarter.

• Outlook. As of June 2024, its orderbook stood at MYR521.2m, a 66% increase from the previous quarter’s MYR313.5m, attributed to new CGPP contract wins. The orderbook comprises 45% CGPP, 35% bioenergy, 16% commercial & industrial (C&I) solar, and the remainder from mini hydro and other projects. We expect higher earnings in 2H with the completion of its Kulim Hi-Tech Park (KHTP) job (currently at c.60% completion) and progress on CGPP projects. Additionally, we are anticipating the upcoming Large-Scale Solar 5 (LSS5) quota award announcement, likely in December. With its CGPP win, we believe Samaiden is well-positioned to secure a share of the LSS5 capacity. In addition to supporting the group’s efforts to expand its asset portfolio, LSS5 will also contribute to replenishing its orderbook. Looking forward, Samaiden stands to benefit significantly from a wave of projects, including the remaining 450MWac KHTP solar projects, as well as opportunities arising from the National Energy Transition Roadmap (NETR), the Integrated Clean Energy (TBB) programme, and the Corporate Renewable Energy Supply Scheme (CRESS).

• Keep BUY and maintain earnings estimates as we consider 1QFY25 to be broadly in line, expecting stronger performance in 2HFY25 as CGPP EPCC earnings kick in. Our SOP TP of MYR1.33 (Figure 2) is kept unchanged, comprising: i) 24x FY25F P/E on EPCC earnings, (ii) DCF (WACC of 7.8% for its 60%-owned biogas asset), and iii) DCF (WACC of 7.8% for its biomass asset). Our TP includes a 6% ESG premium.

• Key risks: Discontinuation of solar incentives, competition risks, and higher- than-expected project costs.

Source: RHB Securities Research - 2 Dec 2024