KUALA LUMPUR: Cypark Resources Bhd's near term growth will be derived from renewable energy (RE) and waste-to-energy (WTE) segments, Maybank Investment Bank (Maybank IB) Research said.
The bank-backed research firm expects Cypark's pre-tax profit from the sale of electricity and deferred turnkey payment to grow by a three-year compound annual growth rate (CAGR) of 17 per cent, to RM42 million by the financial year 2023 (FY23), and contribute 27 per cent of the company's pre-tax profit.
Besides that, the company's waste management and WTE segment is expected to contribute RM14 million, which is 10 per cent of its pre-tax profit.
"All in, we expect its net profit to grow by a three-year FY20-FY23 CAGR of 18 per cent," it said in a note.
Cypark currently owns, operates and manages 18 domestic solar farms, with a total installed capacity of 40 megawatts (MW).
Maybank IB said upon completion of its large-scale solar 2 (LSS2) and LSS3 projects, Cypark will be managing and operating a combined solar capacity of 230MW by 2022, a five times increase from the current capacity.
Apart from solar, Cypark is also developing the first WTE plant in Ladang Tanah Merah, Negeri Sembilan.
Maybank IB said the plant is currently pending testing and commissioning stage by foreign specialists due to pandemic-related inbound travel restrictions.
The plant is currently scheduled for commercial operation by December 2021.
"In addition, Cypark is currently tendering for another two WTE projects in Johor and Melaka, which if successful would provide potential upside to its earnings," it added.
Maybank IB has initiated coverage on Cypark, with a "Buy" rating and target price of RM1.35.