It said it has based its assessment on the premise of strong growth potential from an apolitical multi-year energy transition theme.
Of the two counters it has chosen to cover first, HLIB has a more positive take on Samaiden Group Bhd than Solarvest Holdings Bhd.
Its target price (TP) for Samaiden is RM1.43 compared with RM1.14 currently but it has given Solarvest a lower TP of RM1.20 compared with its current price of RM1.24.
The two counters are the only solar engineering, procurement, construction and commissioning (EPCC) players listed on the Main Market of Bursa Malaysia.
The investment bank has a “buy” call for Samaiden. “Our TP is derived by pegging earnings to a P/E-to-growth ratio of 1.0x, implying a target P/E multiple of 25.9x based on our forecast three-year earnings CAGR of 25.9%,” HLIB analyst Edwin Woo said.
In its filing with Bursa yesterday, Samaiden reported they have been awarded a contract value of RM181.34 million by Suria Infiniti Sdn Bhd, an indirect associate company of Uzma Bhd.
The contract is to develop a solar power plant with a capacity of 50MW in Sungai Petani, Kedah.
The contract awarded to Samaiden is expected to contribute positively towards its earnings through the duration of the project.
As for Solarvest, HLIB has a “hold” call. The forecast PE multiples for Solarvest are 31.1x for FY2024, 28.2x for FY 2025 and 20.0x for FY 2026.
“In our SOP valuation, we have applied a 26x target P/E multiple on its EPCC segment based on a three-year average segmental EPS forecast and discounted cashflows of its recurring income stream from LSS4 and Powervest assets,” Woo said.
In its research notes today HLIB said Malaysia, as one of the signatories of the Paris Accord, has pledged to an unconditional reduction of greenhouse gas (GHG) emissions by 45% by 2030 compared with 2005 levels.
“Ultimately, the goal is carbon neutrality by 2050 as highlighted under the 12th Malaysia Plan,” HLIB said in its notes.
It said decarbonising power generation mix is critical given that the sector accounts for 40% of carbon emissions and is the low-hanging fruit in this green journey.
RE sources like hydro, solar and biomass produce significantly lower lifecycle CO2 emissions and form the core of Malaysia’s RE strategy.
At the time of writing, Samaiden’s share price was up a sen (0.88%) at RM1.15 with a market capitalisation of RM 445.5 million, while Solarvest’s share price was down two sen (1.61%) at RM1.22 with a market capitalisation of RM 814.42 million.