Maintain BUY and MYR1.35 TP
We are optimistic on stronger operations and financial outlook ahead, upon completion of Waste-To- Energy (WTE), LSS2 and LSS3 projects in FY22. Its WTE is already in the final stage of completion, and is expected to achieve Commercial Operation Date (COD) in April 2022, while LSS2 and LSS3 projects are currently on track to achieve COD by 2Q 2022. We adjust lower our FY22E by 11%, but maintain our SOP-TP of MYR1.35.
LSS2 and LSS3 is well in progress
To recap, Cypark is currently developing a combined 90MW (30MW each) and another 100MW of solar PV projects under LSS2 and LSS3 respectively. To note, the 30MW in Sik, Kedah (LSS2) has successfully achieved COD on 1 Jan 2022. For the rest of the projects, which are located in Danau Tok Uban, Kelantan (LSS2) and Merchang, Terengganu (LSS3), these are currently on-going. We expect these solar power plants to COD in 2Q 2022, a slower progress due to pandemic and monsoon season disruptions.
WTE in the final stage of completion
Meanwhile, the testing and commissioning (T&C) of its 25MW WTE plant in Ladang Tanah Merah (LTM), Negeri Sembilan has been on-going since mid-Nov 2021, and is expected to complete by end-1Q 2022. We estimate the generation of electricity to start from April. Upon COD, we understand the plant will be ready to immediately operate at its optimum capacity.
Execution of WTE remains a key priority
We adjust lower our FY22E forecast by 11%, to account for slower-than-expected commissioning of its RE projects (i.e. LSS and WTE), with minor adjustments for FY23E/24E. Nevertheless, we maintain our SOP-TP of MYR1.35. Currently, Cypark trades at only 5.8x FY22E PER (vs peers at 16x PER). We believe Cypark is trading at a lower PER compared to its peers due to its rapid expansion into RE in the last few years which has weakened its financials. However, we expect its’ balance sheet to improve once the LSS2, LSS3 and WTE plants are commissioned from FY22 onwards.