CGSCIMB forecasts stronger earnings for Cypark

TheStar Thu, Jan 03, 2019 05:35pm - 5 years View Original


PETALING JAYA: Cypark Resources Bhd 's earnings are expected to come in stronger on the back of its future projects and a fairer outlook on the renewable energy sector. 

According to a research note by CGS-CIMB, the upcoming LSS 3 auction and revised Net Energy Metering (NEM) in 2019 are positive developments for renewable energy players, especially Cypark.

   
The research house noted that the group won three contracts worth about RM700mil to build three solar photovoltaic energy generating facilities in Sik, Kedah, and Empangan Terip and Empangan Kelinchi in Negeri Sembilan in FY18.

“Based on its projects on hand, Cypark expects its total renewable energy capacity to jump four-fold to more than 120 MW by 2020,” it said. 

Cypark’s full financial year (FY18) core net profit rose 26% y-o-y, lifted by stronger revenue (12% y-o-y), lower administration cost (-25% y-o-y), and lower finance expense (-11% y-o-y).
  
\"Cypark is poised to benefit from a favourable industry outlook as the government aims to raise renewable energy capacity from 2% to 20% by 2025,” said the research house.

The renewable energy player experienced healthy topline growth with revenue rising 12% y-o-y  in the environmental engineering division, 57% y-o-y revenue growth in the maintenance division, and 47% y-o-y revenue growth in the landscaping and infrastructure segment

However, sales in the green tech and renewable division was flattish.

With regards to Cypark’s bid in LSS 2, CGS-CIMB said it is likely to enhance its credibility and strengthen its position in the industry, which should help it to win future bids.

The research house maintained its \"add\" rating as it forecast stronger earnings for FY19F-FY21 due to Cypark’s commissioning of the waste-to-energy (WTE) plant in FY19 and LSS 2 plant in FY21.

Cypark closed one sen lower at RM1.61 a share on Thursday with 290,000 stocks traded.

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