Samaiden Group Bhd
Outperform. Target price: RM1.51
SAMAIDEN’s 1H FY24 core net profit of RM6 million came in at only 37% and 29% of our full-year forecast and full-year consensus estimate, respectively. However, we deem the results within expectation as we expect a strong 2H backed by the delivery of the RM188 million EPCC job for the 50MW LSS4 project of UZMA.
YoY, its 1H FY24 revenue jumped 17% driven by strong progress billings from its LSS EPCC jobs. Its core net profit rose by a steeper 22% thanks to lower solar panel prices that more than made up for the inherently low margins of LSS projects.
QoQ, similarly, its Q2’24 core net profit increased by 7% driven by strong progress billings of LSS EPCC jobs.
The prospects of the solar energy sector are well-supported by the National Energy Transition Roadmap (NETR) which sets an ambitious target of RE to make up 70% of total power generation capacity by 2050. In line with the roadmap, the Energy Commission is embarking on LSS5 with a quota of 2GW and a developer is now allowed to bid for up to 500MW (vs. only 50MW previously). This initiative alone, will translate to a pipeline for solar EPCC players worth as much as RM5 billion based on our estimates, which will keep the sector busy until 2028.
Also, an additional quota of 400MW under the NEM initiative from Feb to Dec 2024 will continue to facilitate investment by businesses in solar energy generation assets. Recall, businesses in general, 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.
Currently, SAMAIDEN’s outstanding order book stands at RM358 million, which will keep it busy for at least over the next 18 months.
We maintain our forecasts, TP of RM1.51 and OUTPERFORM call.