Cypark Resources saw its 1QFY24 core net loss of MYR7.1m which Maybank IB says fell short of consensus of FY24E net profit of MYR29m/19m on lower contribution from waste management & WTE. The house expects earnings to improve from 2HFY24 coming from the WTE segment.
Excluding MYR3.9m distribution to perpetual sukuk, RM1.3m reversal of impairment on contract asset, and MYR2.5m tax credit, 1QFY24 core net loss was MYR7.1m. Waste management & WTE were under-delivered, as the WTE plant was still in its early stage of operation. The segment recorded a pretax loss of MYR6.2m due to lower revenue from the sale of electricity from the WTE plant. Cypark expects the WTE plant to achieve optimal capacity from 2QFY24. Group earnings however were partially cushioned by recurring income from its solar assets and waste management.
Maybank IB adjusted FY24/25/26E earnings by -34%/+57%/+103% on lowering contribution from the WTE plant in FY24 (revised capacity factor of 60%, previously 70%), higher tipping fees in FY25/26E (+71%) and EPCC orderbook replenishment assumptions of MYR150m/MYR200m in FY25/26E (previously none). The house expects Cypark to secure more EPCC projects after completing its ongoing projects in Kelantan and Terengganu by Dec 2023.
Cypark’s near-term earnings will be supported by its 72MWAC of solar assets, 19.73MWAC of WTE, and MYR109m hospital construction contract. The 2x30MWAC LSS2 in Danau Tok Uban and 100MWAC LSS3 in Merchang will be commissioned by Dec 2023. Management also expects a higher tipping fee in the Apr 2024 review for its waste management. While Cypark
continues to focus on completing its current projects, it expects to venture into new projects i.e. NEM rooftop for tier-one financial institutions, hotels, and state-owned entities. It also expects further opportunities from the remaining 237MW of CGPP (of total 800MW) and RE export.
