Main Board listed Cypark Resources Berhad’s 9MFY24 core net loss of MYR21.4m was sizeable relative to Maybank IB’s/consensus’ FY24E net loss forecast of MYR24m/9m on lower contribution from waste management & WTE and slower-than-expected recognition of construction operations.
Maybank Investment Bank (Maybank IB), in a note today (Apr 2), said they now forecast FY24E net loss to widen to MYR37m but raise FY25E net profit by +117%.
Maybank IB made no change to their FY26E forecast and their SOP-TP of MYR0.86 while maintaining a HOLD call.
Dragged by one-off amortisation at WTE
Maybank IB said excluding MYR5.5m impairment on trade receivables and MYR21m one-off WTE amortization due to changes in concession term, 3QFY24 core net loss widened QoQ to MYR9.5m (+96%).
Waste management & WTE recorded a pre-tax loss of MY33m (incl. one-off amortisation cost) due to rainy season in N.Sembilan which affected the moisture level of waste, leading to lower plant efficiency.
Meanwhile, the construction operations under-delivered (revenue: -82% QoQ) due to slower work progress of the 10-storey private hospital project for Selgate.
YTD revenue recognised for the project was MYR21.9m out of full contract sum of MYR108.8m.
Earnings adjustments
Maybank IB raised their FY24E core net loss projection to MYR37m (+56%) on imputing the weak 3QFY24 results.
They however raised FY25E net profit by +117% as they now expect construction of the private hospital project to complete in mid-Jun 2024 (previously Jan 2024).
No change to their EPCC job win forecasts; Maybank IB have assumed MYR150m of EPCC orderbook replenishment in FY25/26E respectively (none in FY24E).
Still awaiting new EPCC jobs
As Cypark focuses on completing its LSS projects, it is also exploring new RE related opportunities in solar and WTE.
In Dec 2023, Cypark entered into a MoU with Abu Dhabi Future Energy Company PJSC to collaborate on RE projects in Malaysia. The partnership will explore various initiatives, including the development of BESS, with the goal of establishing a 1GW project in Malaysia.
Cypark is also looking at Sarawak to expand its RE ops.
