Initiation coverage: Samaiden gets ‘Buy’ at RM1.66, Westports at RM5.08

SAMAIDEN Group Bhd and Westports Holdings Bhd have both received a ‘Buy’ rating in two initiation coverage reports released today by Apex Securities Bhd.

Samaiden, which specialises in engineering, procurement, construction and commissioning (EPCC) services for solar, biomass, biogas and hydro-related projects has been given a 52-week target price (TP) of RM1.66.

The report said Samaiden was poised to benefit from long term renewable energy (RE) capacity rollout to achieve RE target mix of 70%.

“We favour Samaiden due to (i) a solid track record of delivering 200 RE projects in a timely manner, (ii) specialisation in ground-mounted solar PV (photovoltaic) systems, capturing an average of 15.4% market share of EPCC jobs from LSS (Large Scale Solar) 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 0.04x as of the first nine months of 2024 (9M24), (vi) benefits from the normalisation of solar module prices, and (vii) long-term RE industry growth potential from the rollout of the National Energy Transition Roadmap (NETR),” it added.

In a separate report, Apex Securities has assigned a 52-week TP of RM5.08 for Westports.

“We project core net profit to grow by approximately 8% and 4% year-on-year (YoY) in financial year 2024 (FY24F) and FY25F, driven by (i) prospects of recovery in external and international trade, (ii) resilience of the domestic economy and (iii) influx of foreign direct investment (FDI) supporting gateway volumes,” it said.

The report noted Westports’ ongoing massive expansion and the anticipated tariff revision to bolster growth.

It noted that the expansion of Westport 2 will significantly increase capacity, enabling the port to cater towards rising demand and fuel growth.

“This strategic move aims to support the anticipated increase in container throughput driven by economic growth and higher trade volumes. The phased development of new terminals will position Westports to accommodate larger vessels and increased traffic, ensuring sustained long-term growth and maintaining its competitive edge in the region,” it said.

It said an anticipated tariff hike was poised to enhance revenue and margin growth for Westports.

Tariffs represent the maximum charges levied on shipping liners, currently set at RM300/TEU (twenty-foot equivalent unit) for gateways and RM182/TEU for transshipments. The last increase occurred between 2016 and 2019, resulting in a 20% rise.

“Presently, the group has initiated discussions with the government to secure approval for a tariff adjustment, aligned with its expansion plans. We anticipate approval may materialise within a two-year timeline. This tariff adjustment is expected to bolster the group’s revenue and margin expansion,” it said.

At 9.30am today, Samaiden was trading at RM1.29 (52-week high/low: RM1.42/93 sen), valuing the company at RM540 million, while Westports was trading at RM4.20 (52-week high/low: RM4.30/RM3.15), giving it a market capitalisation of RM14.3 billion. — TMR