Heavy borrowing is due to Cypark biz model. Cypark develop, own and operate, not merely as a contractor, a no of RE projects with REPPA with TNB as the off taker. The power purchase contracts for example, for solar. is 21 years and Cypark will reap future benefits with little risk by owning these capital intensive projects and mind you debts for financing these power projects are ring fenced. It is worth nothing that many Cypark solar projects, for example, were developed earlier where the returns of investments are much more lucrative.
Remember how serba collapse loh! It is bcos of high borrowing which was risk mah!
Posted by Karlos > Jan 10, 2022 2:39 PM | Report Abuse
Heavy borrowing is due to Cypark biz model. Cypark develop, own and operate, not merely as a contractor, a no of RE projects with REPPA with TNB as the off taker. The power purchase contracts for example, for solar. is 21 years and Cypark will reap future benefits with little risk by owning these capital intensive projects and mind you debts for financing these power projects are ring fenced. It is worth nothing that many Cypark solar projects, for example, were developed earlier where the returns of investments are much more lucrative.
Agree heavy borrowing not backed with assets that have no guaranteed future income can be dangerous. Heavy borrowing by itself can not be automatically construed as unhealthy. Must understand in detail how the borrowings are spend on.
Yes...People thought they understand how the borrowing they took , is well spend but they don't mah!
Like the case of serba....it is too late loh!
In order to spot the danger early...u look at the ROE, the net positive cash flow, the trend, size & direction of the leverage and most importantly how far it is growing agst the shareholders fund mah!
Also the gestation period b4 they can actually break even mah!
Posted by Karlos > Jan 10, 2022 2:52 PM | Report Abuse
Agree heavy borrowing not backed with assets that have no guaranteed future income can be dangerous. Heavy borrowing by itself can not be automatically construed as unhealthy. Must understand in detail how the borrowings are spend on.
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Posted by sherlockman > 2022-01-09 19:24 | Report Abuse
nice style of writing :) Your genetec call was spot on and I believe your renewable energy stock will be another multi bagger too