KUALA LUMPUR: Maybank Investment Bank Bhd (Maybank IB) has indicated that Cypark Resources Bhd would turn a loss in the fiscal year 2024 (FY24).
Due to flooding in Kelantan and Terengganu, the development of the large solar scale (LSS) 2 and LSS3 projects by the renewable energy firm may only be completed by the first quarter (Q1) of 2024 (originally December 2023)
"We understand that potential liquidated and ascertained damages (LAD) can only be ascertained upon completion of the projects.
"We now expect Cypark to report a net loss of RM24 million (from RM19 million in net profit) in FY24 and return to profitability in FY25/FY26 with a lower RM11.3 million/RM12.7 million net profit from RM41.4 million/RM53.2 million, respectively," said Maybank IB.
Cypark's waste-to-energy (WTE) segment posted RM19.5 million in revenue and RM15.3 million in pre-tax loss in the first half of 2024 (1HFY24) due to higher plant outages.
Management guided a capex of around RM20 million in FY25 to ensure plant optimisation.
"We understand this will be funded by the perpetual sukuk subscribed to by Jakel Capital (not listed). We expect WTE to only breakeven in FY25 on higher operational costs, at least until 1HCY25.
"Meanwhile, higher tipping fees (to operate and maintain the sanitary landfill) are still pending authorities' approval. The current tipping fee is ~RM33 per metroc tonne (MT) of municipal solid waste," it said.
As Cypark focuses on completing its LSS projects, they are also exploring new RE related opportunities, such as solar and WTE.
In December 2023, Cypark entered into a memorandum of understanding with Abu Dhabi Future Energy Company PJSC (Masdar) to collaborate on RE projects in Malaysia.
Cypark is also looking at Sarawak to expand its RE operations.
"We currently assume RM150 million of EPCC orderbook replenishment in FY25 and 26E, respectively," Maybank IB said.
The investment bank lowered its target price to 86 sen and downgraded the stock to hold.