Good123

Cypark Resources Berhad - Weak Start
Date:
2022-04-01
Firm:
PUBLIC BANK
Stock:
CYPARK
Price Target:
1.16
Price Call:
BUY
Last Price:
0.405
Upside/Downside:
+0.755 (186.42%)
Cypark reported a weaker 1QFY22 core net profit of only RM12.1m (-5.1% YoY) despite of revenue increases slightly by 0.9% YoY. Performance for the quarter was still affected by lower work activities and efficiencies due to higher COVID19 infections at project sites which caused disruptions in manpower deployment. Inclement weather also affected site conditions and onsite working hours. Earnings are below our expectations at 10% and 13% of our and consensus of full-year FY22 net profit estimates respectively. We see this as only a temporary setback and expect earnings to pick up from 2HFY22 onwards, driven by increase in work activities from its construction-related projects, as well as commencement of its 20MW waste-to-energy (WTE) plant at Ladang Tanah Merah this year. We also expect the Group to commence its 60MW large-scale solar (LSS 2) plant in Kelantan and 100MW LSS 3 project in Terengganu. That said, our FY22/FY23 earnings projections are adjusted lower by 46.1% and 24.0%, reflecting a weaker 1QFY22 results as well as the delays in its RE project commencements. We maintain our Outperform call on Cypark, with a revised target price of RM1.16 (from RM1.49 previously), on SOP-based valuations.

Results highlight. Revenue for the quarter fell 11.2% QoQ to RM77.2m mainly due to lower billings recognition from its construction & engineering and WTE segment, dropping 58.8% and 69.0% QoQ respectively. Weaker revenue for these segments are mainly due to lower work activities as a result of a higher COVID-19 infections at project sites which caused disruption of manpower deployment. Inclement weather also affected site conditions and onsite working hours. Nevertheless, the performance was partly offset by higher revenue contribution from the RE segment (+15.9%) to RM66.3m, mainly attributed to better energy generation from most of its solar plants as compared to the previous quarter. That said, earnings were weighed by higher administration cost and distribution to perpetual sukuk holders. Core net profit for the quarter declined 52.9% QoQ to RM12.1m.
Earnings outlook. We cut FY22/FY23 earnings projections lower by 46.1% and 24.0% respectively, reflecting a weaker 1QFY22 results as well as the delays in its RE project commencements. We foresee earnings picking up in 2HFY22, driven by increase in work activities from its construction-related projects, as well as commencement of its 20MW waste-to-energy (WTE) plant at Ladang Tanah Merah after delays in testing due to lockdowns and travelling restrictions. Earnings are also to be supported by the completion of its 60MW large-scale solar (LSS 2) plant in Kelantan which was previously affected due to floods in the state, as well as its 100MW LSS 3 project in Terengganu.
Source: PublicInvest Research - 1 Apr 2022

2022-05-25 15:58

Good123

April 1, 2022

Energy Malaysia

THIS REPORT HAS BEEN PREPARED BY MAYBANK INVESTMENT BANK BERHAD
SEE PAGE 9 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

PP16832/01/2013 (031128)

Abbreviations
MW – Megawatt
LSS – Large Scale Solar
WTE – Waste to Energy

Nur Farah Syifaa
nurfarahsyifaa.mohamadfuad@maybank-ib.com
(603) 2297 8675
Cypark Resources (CYP MK)
1QFY22 in-line

Maintain BUY
Cypark’s 1QFY22 core net profit came in within expectations where
earnings were at 17%/18% of our/consensus’ full year estimates. This was
also in-line with expectation of earnings improvement in 2H, upon
completion of LSS2, LSS3 and WTE. Nevertheless, we adjust lower our
FY22/23/24E net profit by 23%/10%/10% respectively, as we anticipate
delay in commissioning of WTE to July 2022 (previously April) and after
adjusting for distribution of perpetual sukuk. Our SOP-based TP is
unchanged at MYR1.35. Maintain BUY.

2022-05-25 16:01

Good123

Within expectations
1QFY22 core net profit was MYR12.1m (-3% YoY). Our core net profit
calculation excludes the MYR3.4m distribution to perpetual sukuk.
Operations-wise, results were within our expectations as we were
expecting LSS2, LSS3 and WTE to commence in 2H22. YoY, revenue and PBT
marginally increased by 0.9% from Renewable Energy segment due to
better energy generation from most of the solar plants. PAT for 1QFY22
increased 4% YoY to MYR15.5m from lower deferred tax expenses.
Revising down forecasts
Our revised forecast imputes a delay in the commissioning of WTE to July
2022 (prev. April 2022). We note that WTE faced multiple manpower
disruptions in Jan and Feb, due to surge in Covid cases and restrictive SOP
during its testing and commissioning phase. We also now include
distribution to perpetual sukuk into our forecasts. As a result, our net
profit forecasts for FY22/23/24E are lowered by 23%/10%/10%.
Earnings to improve from 2H22
Cypark expects its RE portfolio to grow from 2H22 onwards, whereby it
expects to manage and operate a combined solar capacity of 230MW vs.
70MW currently. The solar PV projects for the remaining 60MW under LSS2
in Kelantan and 100MW under LSS3 in Terengganu are expected to
complete in 2Q of 2022. We also expect it to kick start its first WTE plant
in Ladang Tanah Merah, Negeri Sembilan in July 2022, given that the
project is in the last leg of completion.

2022-05-25 16:02

Good123

FYE Oct (MYR m) FY20A FY21A FY22E FY23E FY24E
Revenue 304 315 407 535 536
EBITDA 123 114 160 235 234
Core net profit 70 63 71 106 106
Core EPS (sen) 11.2 10.1 11.4 17.0 17.1
Core EPS growth (%) (23.9) (9.4) 12.4 49.4 0.4
Net DPS (sen) 0.0 0.0 2.9 4.3 4.3
Core P/E (x) 7.2 9.8 7.1 4.8 4.8
P/BV (x) 0.6 0.6 0.5 0.4 0.4
Net dividend yield (%) 0.0 0.0 3.5 5.2 5.2
ROAE (%) 8.8 7.0 6.9 9.5 8.8
ROAA (%) 3.1 2.5 2.5 3.7 3.7
EV/EBITDA (x) 11.0 14.7 10.0 6.3 5.7
Net gearing (%) (incl perps) 90.4 88.9 86.2 70.7 56.2
Consensus net profit - - 86 99 97
MKE vs. Consensus (%) - - (17.3) 6.7 9.2

2022-05-25 16:05

Good123

Share Price MYR 0.82
12m Price Target MYR 1.35 (+69%)
Previous Price Target MYR 1.35
BUY
Company Description

Statistics
52w high/low (MYR)
3m avg turnover (USDm)
Free float (%)
Issued shares (m)
Market capitalisation
Major shareholders:

9.9%
6.0%
5.9%
596
0.2
Cypark Resources is pioneering developer and
provider in renewable energy, green tech &
environmental services, and waste management &
WTE.

BIN AHMAD DAUD
BIN ISMAIL RAZALI
Employees Provident Fund

1.36/0.79
75.7
MYR486.1M
USD116M

April 1, 2022

Energy Malaysia

THIS REPORT HAS BEEN PREPARED BY MAYBANK INVESTMENT BANK BERHAD
SEE PAGE 9 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

PP16832/01/2013 (031128)

Abbreviations
MW – Megawatt
LSS – Large Scale Solar
WTE – Waste to Energy

Nur Farah Syifaa
nurfarahsyifaa.mohamadfuad@maybank-ib.com
(603) 2297 8675
Cypark Resources (CYP MK)
1QFY22 in-line

sOURCE: mAYBANK INVESTMENT BANK

2022-05-25 16:06

Good123

Value Proposition
 Cypark engages in renewable energy, construction and
engineering, green tech and environmental services, as well
as waste management and waste-to-energy businesses.
 It currently owns, operate and manages 18 domestic solar PV
farms with total installed capacity of 40MWAC. Cypark
expects to expand its solar PV generation to 230MWAC by
2022.
 Construction of its first WTE plant is near completion, and
the plant will be generating 25MW of electricity.

2022-05-25 16:08

Good123

Source: Company, Maybank IBG Research
1. Secures two contracts for the LSS2 in Negeri Sembilan
(May 2017).
2. Implementation of Movement Control Order (Mar 2020).
3. Signs PPA agreement with TNB for LSS3 project (May
2020).
4. Secures FiT for 51% biogas project at Ulu Remis, Johor
(Mar 2021).
5. Implementation of Movement Control Order 3 (Jun 2021).

2022-05-25 16:09

Legend

Hari ini dinner makan lauk ikan bilis satu ekor saja.

2022-05-25 16:10

Good123

Financial Metrics
 Earnings in FY22-24E to be supported by RE and WTE
segments, mainly from increase in solar PV generation
capacity and commencement of its first WTE plant, that has
stable cashflow streams.
 Targeting MYR200m EPCC job replenishment annually.
 Net gearing stood at 0.9x as of end-Dec 2021, where 90% of
its borrowings were project financing.

2022-05-25 16:11

Good123

Swing Factors
Upside
 Sizeable job wins from EPCC work for LSS4 and NEM, and
future LSS project roll-outs.
 Growing portfolio of power generation capacity e.g. solar
PV, biogas and biomass.
 Securing more WTE projects.
Downside
 Delay in commencement of its solar and WTE plants could
affect timing of earnings and cash flow recognitions.
 Weather conditions could affect income from sale of
electricity.
 Increase in price for solar panels and inverters could
affect its solar project margins.

2022-05-25 16:12

Good123

Business Model & Industry Issues
 Renewable energy (RE) has always been Cypark’s core business strategy i.e. it is involved in various forms of RE business, namely
solar, waste-to-energy (WTE), biogas, and biomass. To-date, the Group’s RE parks has generate ~344.5GWh of electricity, which
reduce level of carbon dioxide (CO2) by 237,704 tonnes.
 Cypark’s RE parks focus on the use of non-productive and/or non-commercial areas e.g. on landfill areas and rehabilitated
landfill areas which will not involve any additional land acquisition and tree and vegetation clearing throughout the park creation
process. To-date, it has successfully transformed 94,000 acres of non-productive, abandoned and degraded areas into
environmentally-friendly RE projects.
 It will continue to build its RE portfolio to 230MWAC by 2022, from 70MWAC currently.
In our view, Cypark's is generally well positioned in terms of ESG factors; however, the number of female Board members (none
currently) should be improved.

2022-05-25 16:12

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Material E issues
 The Group’s development of RE parks produce zero

greenhouse gas (GHG) emissions through the usage of non-
productive and/or non-commercial areas e.g. on water

bodies, landfill areas and rehabilitated landfill areas.
 In FY20, the Group’s RE parks, which are in commercial
operations, have successfully avoided the emission of
41,933 tonnes of carbon dioxide (CO2) while generating
60,772MWh of renewable energy (FY19: 42,844 tonnes CO2,
62,093MWh).
 Cypark expect to increase its RE capacity to 230MW by 2022,
from 70MW currently.

2022-05-25 16:14

Good123

Material E issues
 The Group’s development of RE parks produce zero

greenhouse gas (GHG) emissions through the usage of non-
productive and/or non-commercial areas e.g. on water

bodies, landfill areas and rehabilitated landfill areas.
 In FY20, the Group’s RE parks, which are in commercial
operations, have successfully avoided the emission of
41,933 tonnes of carbon dioxide (CO2) while generating
60,772MWh of renewable energy (FY19: 42,844 tonnes CO2,
62,093MWh).
 Cypark expect to increase its RE capacity to 230MW by 2022,
from 70MW currently.

2022-05-25 16:14

Good123

Cypark reported a weaker 1QFY22 core net profit of only RM12.1m (-5.1% YoY) despite of revenue increases slightly by 0.9% YoY. Performance for the quarter was still affected by lower work activities and efficiencies due to higher COVID19 infections at project sites which caused disruptions in manpower deployment. Inclement weather also affected site conditions and onsite working hours. Earnings are below our expectations at 10% and 13% of our and consensus of full-year FY22 net profit estimates respectively. We see this as only a temporary setback and expect earnings to pick up from 2HFY22 onwards, driven by increase in work activities from its construction-related projects, as well as commencement of its 20MW waste-to-energy (WTE) plant at Ladang Tanah Merah this year. We also expect the Group to commence its 60MW large-scale solar (LSS 2) plant in Kelantan and 100MW LSS 3 project in Terengganu. That said, our FY22/FY23 earnings projections are adjusted lower by 46.1% and 24.0%, reflecting a weaker 1QFY22 results as well as the delays in its RE project commencements. We maintain our Outperform call on Cypark, with a revised target price of RM1.16 (from RM1.49 previously), on SOP-based valuations.

Results highlight. Revenue for the quarter fell 11.2% QoQ to RM77.2m mainly due to lower billings recognition from its construction & engineering and WTE segment, dropping 58.8% and 69.0% QoQ respectively. Weaker revenue for these segments are mainly due to lower work activities as a result of a higher COVID-19 infections at project sites which caused disruption of manpower deployment. Inclement weather also affected site conditions and onsite working hours. Nevertheless, the performance was partly offset by higher revenue contribution from the RE segment (+15.9%) to RM66.3m, mainly attributed to better energy generation from most of its solar plants as compared to the previous quarter. That said, earnings were weighed by higher administration cost and distribution to perpetual sukuk holders. Core net profit for the quarter declined 52.9% QoQ to RM12.1m.
Earnings outlook. We cut FY22/FY23 earnings projections lower by 46.1% and 24.0% respectively, reflecting a weaker 1QFY22 results as well as the delays in its RE project commencements. We foresee earnings picking up in 2HFY22, driven by increase in work activities from its construction-related projects, as well as commencement of its 20MW waste-to-energy (WTE) plant at Ladang Tanah Merah after delays in testing due to lockdowns and travelling restrictions. Earnings are also to be supported by the completion of its 60MW large-scale solar (LSS 2) plant in Kelantan which was previously affected due to floods in the state, as well as its 100MW LSS 3 project in Terengganu.
Source: PublicInvest Research - 1 Apr 2022

2022-12-19 18:04