KUALA LUMPUR (June 24): Apex Securities Bhd has initiated coverage of Samaiden Group Bhd (KL:SAMAIDEN) at RM1.30, with a “buy” rating and target price of RM1.66, saying Samaiden is poised to benefit from long-term renewable energy (RE) capacity roll-outs to achieve an RE target mix of 70% in Malaysia.

In a note on Monday, the research house said Samaiden’s core earnings are expected to improve, driven by: i) an unbilled order book of RM354.3 million; ii) a recent engineering, procurement, construction and commissioning (EPCC) project win at the Kulim Hi-Tech Park worth RM100 million; iii) ongoing tenders from the Corporate Green Power Programme valued at about RM350 million; iv) 2.0GW quotas from the fifth round of the Large Scale Solar (LSS) programme, with an estimated yield of RM5.8 billion; and v) ongoing efforts to replenish orders from various clean energy solutions.

Apex Securities said it favours Samaiden due to: i) a solid track record of delivering 200 RE projects in a timely manner; ii) specialisation in ground-mounted solar photovoltaic systems, capturing an average of 15.4% market share of EPCC jobs from LSS projects; iii) expertise in bioenergy solutions, particularly in biomass; iv) robust order book replenishment, consistently around RM350 million; v) strong fundamentals, with a net cash position of RM96.9 million and a low gearing ratio of 0.04 times as of the cumulative nine months ended March 31, 2024 (9MFY2024); (vi) benefits from the normalisation of solar module prices; and (vii) long-term RE industry growth potential from the roll-out of the National Energy Transition Roadmap.

The research house said key risks include fluctuation in solar module costs and heavy reliance on government initiatives.