Maybank IB made no changes to Cypark’s earnings forecasts.
PETALING JAYA: The higher tipping fee for Cypark Resources Bhd
’s waste-to-energy (WTE) facility in Negri Sembilan is expected to enhance its recurring revenue and improve the cash flow profile of its WTE operations.
On Monday, Cypark said the government had revised the tipping fee for its WTE, effective from its completion date of April 2023.
“This marks a positive milestone for Cypark, reinforcing the financial viability of its WTE operations.
“However, as we had already factored in the higher tipping fee in our financial projections, hence made no changes to our core earnings forecasts,” Maybank Investment Bank Research (Maybank IB) said.
The research house added that the only impact it expects will be from a one-off earnings boost in the fourth quarter of financial year 2025, which is the February to April period.
This is because the backdated adjustments from April 2023 will be recognised in the upcoming financial results.
“Based on our estimates, an RM1 per tonne a day of municipal solid waste (MSW) increase in tipping fees could generate around RM300,000 in additional annual revenue for the segment, highlighting the positive long-term financial impact of this revision,” Maybank IB added.
It noted that Cypark remains a pioneer in Malaysia’s WTE industry, having developed and managed the first WTE plant at Ladang Tanah Merah (LTM), Negri Sembilan.
The facility operates under a 25-year concession agreement, which is until 2041 with the government, covering an integrated waste facility, consisting of a sanitary landfill, a waste segregation plant, and a 15 megawatts (MW) WTE plant.
The sanitary landfill has been operational since November 2015, processing 1,000 tonnes of MSW a day. After an unscheduled downtime and upgrading works that began in April last year, the WTE plant resumed operations on Oct 29, 2024.
With the completion of all its large-scale solar projects, the research firm said Cypark is now focusing on opportunities in solar engineering, procurement, construction and commissioning, plus the second phase of an expansion of its WTE operations.
In November 2024, Cypark entered into a teaming agreement with China Tianying Inc. It was an undertaking to develop a plasma WTE line at its existing WTE facility at the LTM facility.
In December 2024, it had established a joint venture with Terengganu Inc to develop a 500 MW hybrid hydro floating solar plant at Tasik Kenyir, Terengganu, with design work set to begin in 2025.
While the research firm made no changes to Cypark’s earnings forecasts, it has upgraded the stock to a “buy” with an unchanged target price of 87 sen.
Shares of Cypark traded at 70 sen at the time of writing.
