KUALA LUMPUR (March 5): Samaiden Group Bhd (KL:SAMAIDEN) is facing heightened competition in the solar engineering, procurement, construction, and commissioning (EPCC) sector, affecting its profit margins.

In a note on Wednesday, MIDF Research said that the company had acknowledged that the influx of new players in the market is contributing to this increased competitive pressure. 

"The management acknowledged that the solar EPCC scene is getting more competitive with more players flooding the market.

"As far as Samaiden is concerned, it would leverage on the low solar panel prices currently and effective project management to gradually improve its project margins," said the house.

MIDF noted that in the first half ended Dec 31, 2024 (1HFY2025), Samaiden saw a slight decline in gross profit margin from 14.8% to 13.8% amid rising competition.

Nonetheless, the house reiterated its 'buy' recommendation for Samaiden, maintaining an unchanged target price (TP) of RM1.69, underpinned by the group's strong position in key solar initiatives, such as the Corporate Green Power Programme (CGPP), the large-scale solar (LSS5) scheme, and other upcoming large-scale solar projects.  

The research firm continued to value Samaiden’s EPCC business at a price-earnings ratio of 26 times, which, while a slight discount to industry leader Solarvest, reflects the company's solid track record in utility-scale solar projects. 

Samaiden’s financial position remains robust, with a net cash balance of RM124.7 million, providing the company with the necessary liquidity to capitalise on near-term growth opportunities. 

In a separate note, TA Securities forecast an improvement in Samaiden’s margins, as the group progresses into the panel installation phase of its projects, expected to occur either in the third or fourth quarter of FY2025.  

The company has confirmed that several of its CGPP projects are set to enter the panel installation phase within the next one to two months.  

By capitalising on the current dip in solar panel prices, Samaiden aims to maximise the margin potential of its CGPP contracts. 

To recap, Samaiden secured two of its three CGPP EPCC contracts in September and October 2024, with commercial operation dates expected by August and September 2025 respectively. 

TA kept its 'buy' call on Samaiden, with a TP of RM1.63.

Meanwhile, Apex Securities said that the substantial investment required for Samaiden's projects may prompt the company to seek strategic partnerships to share the financial burden.  

However, the research house expressed confidence in Samaiden’s ability to secure project allotments, citing the company’s proven expertise in utility-scale solar and disciplined project execution.  

Apex maintained its 'buy' recommendation, with a TP of RM1.71, noting the company’s leading position in ground-mounted solar photovoltaic (PV) projects, its industry-low gearing ratio of 0.12 times as of end-1HFY2025, and its strategic focus on bioenergy solutions, which differentiates it from other solar EPCC players.  

Samaiden is principally involved in EPCC of solar PV systems and power plants, provision of renewable energy and environmental consulting services, as well as operation and maintenance services. The company was listed on Oct 15, 2020.  

At the time of writing on Wednesday, Samaiden shares were up six sen or 5.6% at RM1.14, valuing the company at RM479 million.