KUALA LUMPUR: Maybank Investment Bank Bhd (Maybank IB) expects a stronger financial outlook for Cypark Resources Bhd upon completion of large-scale solar 2 (LSS2), LSS3 and waste-to-energy projects this year.
The bank-backed research firm said the construction for the company's WTE project in Ladang Tanah Merah had been completed for some time. However, the facility is currently in the final stage of testing and commissioning (T&C), while its waste segregation plant (WSF) is undergoing a trial operation stage.
Maybank IB stated there were some delays in starting the T&C due to the late arrival of the foreign experts caused by prolonged travel restrictions and stringent standard operating procedures to bring the required foreign experts into Malaysia.
The WTE plant is now scheduled to be commissioned by the end of September 2022.
"We expect a stronger financial outlook upon completing LSS2, LSS3 and WTE projects in the financial year 2022 (FY22).
"Apart from WTE, the solar photovoltaic projects for the remaining 60 megawatts (MW) under LSS2 in Danau Tok Uban, Kelantan, and 100MW under LSS3 in Terengganu are also expected to be completed by the end of September and December 2022, respectively.
"Cypark's rapid expansion into renewable energy (RE) in the last few years has weakened its financials. However, we expect its balance sheet to improve once these projects are commissioned, and cash flow generation begins," it said.
Maybank IB has maintained a 'Buy' call on the stock with a revised target price of RM1.01 from RM1.35 previously.
It reduced its FY22, FY23 and FY24 net profit estimates for the company by 20 per cent, 39 per cent and 29 per cent, respectively, after adjusting for delays in commissioning its WTE, LSS2 and LSS3 projects.
It also lowered the company's engineering, procurement, construction and commissioning orderbook assumptions for FY22, FY23 and FY24E to RM150 million, RM100 million and RM100 million, respectively.