Samaiden to see robust earnings from RE push
PETALING JAYA: The country’s shift towards renewable energy (RE) will see Samaiden Group Bhd benefiting from the rollout of such projects, according to Kenanga Research.
The research firm expects stronger earnings for the RE solutions provider following the 18.02% increase in its net profit to Rm2.44mil for the first quarter ended June 30, 2023 (1Q23).
It said the results came in within expectations, helped by higher engineering, procurement, construction and commissioning (EPCC) works during the quarter, albeit partially offset by poorer job margin mix from large scale solar (LSS) projects.
However, the delivery of upcoming LSS4 projects should translate into stronger quarters ahead.
Additionally, it noted that 1Q has seasonally been the group’s weakest quarter.
As a comparison, 1Q22 and 1Q21 made up 16% and 17% of the full-year earnings, respectively.
“The Malaysian RE space is largely dominated by solar. We foresee over 90% of upcoming new RE capacity to be solar powered.
“Anchored by continued government-led programmes, Malaysia is targeting RE to make up 31% of total power generation capacity by 2025, and 40% by 2035.
Samaiden currently has an order book of Rm325mil, which will keep it busy for the next three years, according to Kenanga Research.
For now, the research firm has not made changes to its FY23 to FY24 forecast numbers.
It maintained an “outperform” call on the stock with an unchanged target price of 86 sen.
Kenanga Research said it liked the stock for reasons including its huge market share, being the second largest in the high-growth local solar EPCC market.
“The company has the ability to provide end-to-end services, including securement of financing where many smaller names are unable to do so.
“The group also has a track record of project execution and delivery within the RE space,” it said.
The risks to the research house’s call include the government dialing back on RE policy, project execution risks such as cost overrun or project delays, as well as the escalating cost of inputs, particularly solar panel and labour.