Public IB Research said the group’s discussion on the tipping fee revision had received favourable response from the authorities.
PETALING JAYA: Cypark Resources Bhd
is expected to improve its margins and cash flow upon the approval of the tipping fee revision, while its green energy plant is estimated to reach maximum capacity in the near term.
Public Investment Bank (IB) Research said the group’s discussion on the tipping fee revision, which is at RM33 per tonne, had received favourable response from the authorities and upon approval, will impact Cypark significantly.
The research house said Cypark’s green energy plant had resumed operations following the plant outage that required repair during the period, which subsequently pulled Cypark’s losses due to the waste-to-energy (WtE) segment from lower sale of green energy.
The plant at Ladang Tanah Merah, Negri Sembilan is expected to reach its maximum capacity of 20MW soon.
On a separate note, Public IB Research said that although the commercial operation date has yet to be announced, the group completed the large solar scale 2 (LSS 2) Danau Tok Uban and LSS 3 Merchang plant last December.
“We do not discount slight delays in the completion date, although it has resumed active progress on both of the projects after the injection of funding from its new major shareholders via a perpetual sukuk,” the research house said in a report.
The local renewable energy player has reported a wider core net loss after tax and minority interest (latami) of RM4.8mil in the second quarter of financial year 2024 (2Q24), as compared to the loss in the previous quarter of the same year with RM2.3mil.
Its loss before tax was also wider in 2Q24 compared with 1Q24 at RM9.1mil and RM6.2mil respectively.
Public IB Research noted that the wider losses were attributable to higher net losses from its WtE segment arising from the plant outage.
The research house said the latami during the first half of FY24 of RM7.2mil was below Public IB Research and consensus full-year net profit expectation of RM20.3mil and RM19.7mil respectively.
In light of the WtE plant outage and probable delays in the commercialisation of LSS and LSS 3 facilities, the research house said that it has lowered its FY24 prediction to net latami of RM9.3mil.
Public IB Research also lowered its forecast for FY25 and FY26 by 49% and 24% respectively, to account for delayed plant optimisation.
Public IB Research maintained its “neutral” recommendation with lower sum-of-parts based target price of 80 sen per share.
