Cypark's solar photovoltaic plant
KUALA LUMPUR: Public Investment Bank Research (PIVB Research) is retaining its Outperform call on Cypark Resources Bhd
with an unchanged sum-of-parts target price of RM2.56.
It said on Thursday the company’s integrated waste management plant at Ladang Tanah Merah (LTM), Negeri Sembilan and waste-to-energy (WTE) project was on track.
“There is a potential for robust earnings growth in FY18, driven by the full scope of renewable energy (RE) revenue from this project,” it said.
LTM was an integrated waste management plant consisting of WTE plant, a sanitary landfill site and other infrastructures that was awarded a 25-year concession period.
Under the agreement, the government delivers contracted solid waste from some parts of Negeri Sembilan to Cypark for treatment and disposal at the Solid Waste Modular Advanced Recovery and Treatment (SMART) WTE system.
PIVB Research said the company’s sanitary landfill at LTM was fully operational and contributes income in the form of tipping fees paid by the government for every tonne of municipal solid waste (MSW) received.
“Meanwhile, management indicated that its upcoming 20MW biomass and 5MW biogas plants were targeted to commission by end CY17. Going forward, Cypark would have an additional income from the sale of up to 25MW electricity to the national power grid,” it said.
There are two revenue streams generated from this LTM operation, which were the tipping fees and sale of electricity produced from the RE.
“We estimate that the tipping fee was around RM30 a tonne, accounting for 4% of our FY16F revenue. In the meantime, the sale of electricity from 20MW biomass and 5MW biogas was expected to generate about RM70mil to RM80mil per year which would be reflected in FY18 onwards until the concession ended.
“Cypark has already submitted bidding for the development of large scale solar photovoltaic plant to the Energy Commission.
“Due to its technical expertise and experience, we believe Cypark would be a frontrunner for the large scale solar project. Cypark is confident to secure more RE projects going forward, leveraging on its leading position in the WTE business that could be replicated via modular concepts,” PIVB Research said.
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