Cypark well positioned for growth

PETALING JAYA: As Cypark Resources Bhd focuses on completing its LSS2 and LSS3 (large scale solar) projects, it is also exploring new renewable energy (RE) related opportunities with other states.Its three ongoing LSS construction projects in Terengganu and Kelantan are targeted for completion by December 2023.

It has a memorandum of business exploration with RGFC Ventures Sdn Bhd to provide solar energy solutions across Selangor, focusing on floating and residential solar.

It is also looking at Sarawak to expand its RE operations via engineering, procurement, construction and commissioning works or asset ownership, said Maybank IB Research.

Further opportunities are from the remaining 237 megawatts (MW) of work under the Corporate Green Power Programme yet to be awarded and RE export.

The research house made no changes to its forecast after a session with Cypark’s management recently. However, it upgraded Cypark to a “buy’’ call, given the 18% total return to its unchanged sum-of-parts target price of RM1.05 a share.

Maybank IB said Cypark has been liaising closely with the authorities on the tipping-fee review.

The group has submitted for higher tipping fees based on feedback from the authorities.

There will be two parts to the fee revision, namely operational expenditure (opex) and capital expenditure (capex).

The opex part is targeted to be approved by November 2023 and the capex part by April 2024.

Cypark now receives a tipping fee of about RM33 per tonne of municipal solid waste for operating and maintaining sanitary landfills.

The research house said Cypark’s 19.73 megawatts of alternating current waste-to-energy (WTE) plant at Ladang Tanah Merah, Negri Sembilan was commissioned on Dec 14, 2022.

In the first quarter of financial year 2024, its waste and WTE segment posted RM10mil in revenue and RM6.2mil in pre-tax loss as WTE revenue from the sale of green energy was under-delivered due to the WTE plant being in its initial stage of operations.

The plant is now undergoing upgrades and technical improvements and is expected to operate at optimal capacity by December 2023.

By then, the waste and WTE segment is expected to generate about RM80mil in revenue, which covers the tipping fee, recycling revenue and green energy sale to Tenaga Nasional Bhd.

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