Movement restrictions likely to delay Cypark solar projects


CGS-CIMB Research has cut its forecast on Cypark’s earnings per share for the financial year 2021 (FY21) and FY22 to adjust for the company’s enlarged share base due to private placement, lower interest cost and delayed commercial operation date (COD) for the Large-Scale Solar 2 (LSS2), LSS 3 and waste-to-energy plants.

PETALING JAYA: The recent movement restrictions to curb the spread of Covid-19 infections could see a delay in Cypark Resources Bhd’s solar plant projects.

CGS-CIMB Research has cut its forecast on Cypark’s earnings per share for the financial year 2021 (FY21) and FY22 to adjust for the company’s enlarged share base due to private placement, lower interest cost and delayed commercial operation date (COD) for the Large-Scale Solar 2 (LSS2), LSS 3 and waste-to-energy plants.

“We cut our sum-of-part base target price to RM1 per share due to Cypark’s enlarged share base from a private placement and ascribe a lower price-earnings ratio (PE) of 13 times from 15 times previously after updating its peer average forecast for environmental engineering (EE) division, ” it said in a report yesterday.

Cypark has recently proposed a private placement of up to 20% of its total number of issued shares to raise up to RM108mil at an illustrative price of RM1.03 per share.

The company has earmarked RM96mil of the proceeds to fund its 100MW LSS 3 project in Merchang, Terengganu, RM11mil for partial repayment of borrowings and the remaining for private placement expenses.

CGS-CIMB said the COD for the LSS 3 plant has been scheduled for March 2022, later than the initial COD date of end-Dec 2021, which could be due to the Covid-19 pandemic.Under the LSS2, Cypark has two solar plant projects with a size of 30MW each, which would likely be delayed again due to relocation and lockdown measures.

“Two floating solar plants under Cypark’s second large-scale solar project, formerly located at Empangan Kelinchi and Empangan Terip, were moved to Danau Tok Uban, Kelantan, in April 2021 with no reasons disclosed.

“Cypark owns the LSS 2 plant at Empangan Terip and is in charge of engineering, procurement, construction and commissioning (EPCC) for the plant at Empangan Kelinchi, both of which were supposed to achieve COD by end-2020.

“With the recent relocation and operation disruptions from lockdowns, we see LSS 2’s COD further delayed to the end-2021, ” CGS-CIMB said.

Cypark has a 20MW water-to-energy project in Ladang Tanah Merah, which is scheduled for COD mid-FY21 this year.

CGS-CIMB reckoned that the project could be delayed again due to lockdowns and travelling restrictions for foreign specialists.

“With the implementation of the movement control order that limits worker capacity on project sites to 60%, we believe the EPCC revenue and power plants’ progress will be impacted due to the slower work progress expected, ” the research house pointed out.

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