• Cypark announced that it has started the 100MWac LSS3 Merchang initial operations on 21st April 2024 and it is expected to reach full commercial operation within the coming two weeks.

• We are positive on this as it will generate recurring income for the next 21 years. No revision was made to our earnings forecast as the start-up date of the project is well within our initial estimate.

• Maintain a HOLD call with higher TP of RM0.96 (from RM0.89) as we roll over our valuation to FY2025F. Our TP is derived based on DCF valuation with a WACC of 4.7%.

LSS3 Initial Operation Kicked Off in Mid - April

Cypark announced that its LSS3 100MWac Merchang hybrid solar plant has attained Initial Operations (IOD) since 21st April 2024 and will gain full commercial operation within two weeks’ time. Note that the plant comprises of 83MWac of ground-mounted solar PVs and 32MWac of floating solar PVs. Upon commissioning of the project, it will expand its total installed capacity to reach 235.3MW. Overall, we are positive with the news as the project will generate recurring income over the next 21 years. To recap, Cypark previously guided that both LSS3 (Merchang) and LSS2 (Danau Tok Uban) to be completed by December 2023. The company had previously encountered liquidity challenges in completing the project but has successfully secured financial support from Jakel, which is the major shareholder as of today. Moving onwards, the group anticipates to further boost its revenue upon commissioning of Kelantan LSS2 60MWac floating solar project.

Earnings Revision

No adjustment was made to our earnings forecast the as the startup date of the project is well within our initial estimate.

Maintain HOLD at TP of RM0.96

Maintain a HOLD call on Cypark with a higher TP of RM0.96 (from RM0.89) as we roll over our valuation to FY2025F. Our valuation is derived based on DCF valuation with a WACC of 4.7%. This TP implies 24.4x FY25F PE which is well above +1SD of historical forward P/E. At the current market price, we think it has fully reflected the potential of an upcoming solar asset in operation. Key re-rating catalysts to the stock price include: (i) new win in WTE concession asset, and (ii) further expansion in ownership of solar assets.

Source: BIMB Securities Research - 24 Apr 2024