Samaiden Group Secures Major Bioenergy Contracts, Enhancing Earnings Outlook

Samaiden Group Berhad (SAMAIDEN) has successfully bid for the development of three bioenergy power generation plants with a total gross capacity of 18 megawatts (MW) under the Feed in Tariff (FiT) 2.0 bidding cycle. The projects include a 1.5MW biogas plant in Bachok, Kelantan; a 5.5MW biomass plant in Tangkak, Johor; and an 11.0MW biomass plant in Kemaman, Terengganu. All plants are slated for commissioning by July 25, 2028, and will operate under 21-year Renewable Energy Power Purchase Agreements (REPPAs).

With an estimated capital expenditure (capex) of approximately RM10 million per MW, the aggregate capex for these projects is projected to be RM171 million, with an equity portion of RM34 million. This financial commitment appears manageable given SAMAIDEN's forecasted gross cash position of RM120 million for FY2027.

TA Research forecasts a potential 20% increase in annual earnings and a 10% enhancement in company valuation once the projects become operational, driven by a high single-digit pooled internal rate of return. Despite the positive outlook, TA Research has decided not to adjust its earnings projections at this time, as the power plants are expected to come online in FY2029.

The firm maintains a "buy" rating for SAMAIDEN with a target price of RM1.38, citing the company as a key beneficiary in the renewable energy sector's upcycle, supported by a robust order book, solid net cash position, and an established pipeline of renewable energy assets. However, potential risks include rising raw material costs and project implementation delays.

In conclusion, SAMAIDEN's recent contract wins position the company favorably within the renewable energy landscape, promising enhanced financial performance and stability in the coming years.