Malaysia: Cypark to bid for RM1b worth of projects in FY17

Malaysia: Cypark to bid for RM1b worth of projects in FY17

Cypark Resources Bhd expects to tender for RM1 billion worth of tenders in
environmental engineering, waste management, green techology and renewable
energy in Malaysia and Singapore during its current financial year.

Chief executive officer Datuk Daud Ahmad said this would bring the green and
clean technology solutions provider's total tender book to around RM3
billion for the year ending Oct 31, 2017 (FY17) against RM2 billion in FY16.

"We are proposing various renewable and green technology projects in
Malaysia," he said, noting that the Energy Commission has opened up new
opportunities in the renewable energy space, especially in large-scale
solar power projects.

Speaking to reporters after the company's annual general meeting, Daud said
Cypark may also submit unsolicited proposals to the government, especially
in building a waste-to-energy plant.

"We have been doing that successfully in the past, and we will continue to
do so where we see good opportunities," he said, noting that the renewable
energy cost drops, on average, by 10% to 20% yearly.

"As it is, solar is a non-subsidised business in Malaysia. In some parts of
the world, solar energy would cost less than coal," he added.

As a rule of thumb, Daud said the cost to build a solar plant with a
capacity one megawatt would amount to less than RM7 million.

"For higher capacity of the solar plant, the cost to build it in one
megawatt terms could be less than RM6 million," he added.

For FY17, Cypark expects income to grow between 10% and 20%, driven by its
three divisions - environmental engineering, green techology and renewable
energy - which contributed 86% to its revenue in FY16.

"We are transforming Cypark to be more focused in a concession business. It
is recession proof, and it will generate recurring income to the company,"
Daud said, adding that this will insulate the company from being heavily
impacted from external fluctuations and economic uncertainties.

Daud said when Cypark's waste-to-energy plant in Ladang Tanah Merah, Negeri
Sembilan commences operations in the first quarter of 2018, its revenue is
expected to be boosted by RM80 million per year.

Cypark, he said, has forked out around RM300 million to build the plant that
has a capacity to incinerate 1,000 tonnes of solid waste per day, and
generate some 25MW of electricity that could power some 170,000 households.

On gearing, Daud said Cypark is prudent to ensure that its debt burden would
not exceed 50%. As at end-2016, Cypark's net debt had increased to RM329.71
million or 42.8% from RM216.96 million or 35.5% in 2015.

"Our gearing level tracks the upward movement of the gearing by the power
sector industry leader, Tenaga Nasional Bhd. We incur borrowing to fund for
cash-yielding assets," he said

Going forward, Daud said Cypark is not ruling out expanding its business in
other Asean countries.

"We assess our expansion move to a new market by four criteria: foreign
currency exposure, sovereign and political risk, legal framework and
bankability," said Daud, a former accountant. "Once these are all ticked,
then we are set to sail to the new market."

Cypark is currently partnering with a Singapore company and a leading German
technology firm to bid for a project to develop up to 70MW of solar rooftop
project for buildings managed by the Singapore government, which include
more than 600 flats.

"We are among the three shortlisted companies. As of now, we are still
waiting for the outcome of the tender," said Daud, who is also Cypark's
second largest shareholder with 40.52 million shares, equivalent to a 16.02%
stake.

Cypark shares closed unchanged at RM2.40 today, giving it a market
capitalisation of RM607.05 million.

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Link to Original Article:
http://www.theedgemarkets.com/article/cypark-bid-rm1b-worth-projects-fy17

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com