Maybank Investment Bank Berhad
Report Date: September 19, 2025

Cypark Resources: Earnings Miss, Orderbook Delays, and the Road Ahead for Malaysia’s Renewable Energy Pioneer

Introduction: A Challenging Start to FY26

Cypark Resources Berhad, a pioneering Malaysian player in renewable energy, green technology, environmental services, and waste management, reported a disappointing 1QFY26. The company posted a core net loss of MYR26.8 million, widening from the MYR25.4 million loss a year earlier. This came in below both analyst and consensus expectations due to slower revenue recognition, particularly from the near-completion of the Hospital Rawang project and a temporary outage at its Waste-to-Energy (WTE) plant. Despite these headwinds, Cypark’s renewable energy (RE) segment showed resilience, and management maintains medium-term growth visibility.

Key Highlights and Financial Performance

• Share price (as of report): MYR0.82
• 12-month Target Price: MYR0.88 (down from MYR0.94)
• Recommendation: HOLD
• Market Capitalisation: MYR674.7 million (USD161 million)
• Major shareholders: Jakel Capital (21.5%), Bin Ahmad Daud (8.4%), Social Security Organisation (6.7%)

Quarterly Results: Weakness in Construction, Strength in Renewable Energy

Cypark’s overall revenue for 1QFY26 dropped 16.4% year-on-year to MYR41.7 million, reflecting the winding down of construction activities and the impact of WTE plant downtime. However, the RE division delivered a 20% YoY revenue increase, fueled by steady contributions from the large-scale solar (LSS3) project and higher palm oil mill effluent (POME) biogas sales.

Segment Breakdown

• Renewable Energy: Revenue grew 20% YoY to MYR28.4m. Supported by full-quarter sales from LSS3 and higher POME biogas contributions.
• Construction & Engineering: Revenue collapsed by 97.9% YoY to just MYR0.3m, as the Hospital Rawang project neared completion.
• Waste Management & WTE: Revenue was stable at MYR13.0m (+2.1% YoY), despite a temporary plant outage.

Margin Recovery and Cost Management

Despite earnings pressure, Cypark’s ongoing efficiency initiatives improved EBITDA margins to 52% (up from 38% a year prior), demonstrating the positive impact of a leaner cost structure even amidst revenue shortfalls and increased depreciation and financing costs.

Orderbook, Tenders, and Pipeline: Growth Visibility Amidst Delays

While Engineering, Procurement, Construction, and Commissioning (EPCC) orderbook conversion has been delayed, Cypark maintains a robust MYR3.5 billion tenderbook, targeting MYR2.2 billion in conversions. The company’s future is further buoyed by the recently secured 100MW LSS PETRA 5+ project (Cypark holds a 51% stake alongside Sunview).
The proposed Phase 2 expansion for the WTE plant is pending regulatory approval, which, if granted ahead of expectations, could provide significant earnings uplift. Additionally, refinancing efforts have lowered borrowing costs to 4.8-5.0%, compared to 6.5-6.8% previously, offering some relief to the bottom line.

Forecast Revisions: Lowered Earnings Expectations

Cypark’s outlook for FY26 is notably more conservative. The core net loss forecast for FY26 has been revised from a profit of MYR4.7 million to a loss of MYR69.5 million, driven by lower expected EPCC revenue and a more gradual WTE recovery. FY27 and FY28 forecasts remain unchanged, with a return to profitability anticipated as recurring income from LSS3 and WTE normalizes.

Business Overview: Asset Portfolio and Differentiators

Cypark is uniquely positioned as Malaysia’s integrated RE asset owner-operator with a 400MWp installed capacity across solar, biogas, and WTE assets. Its portfolio includes:

• Merchang LSS3 (172MWp hybrid solar), with commercial operation date (COD) in June 2024
• LSS2 Danau Tok Uban (98MWp floating solar), COD in January 2025
• SMART WTE plant (15MW)

The company’s business covers EPCC, operations & maintenance, consultancy, waste management, and green technology, standing out with innovations like floating and hybrid hydro-solar and circular economy solutions. Strategic partnerships, including with Masdar for battery energy storage (BESS), further strengthen its market positioning.

Key Projects and Pipeline

• MYR4 billion Memorandum of Agreement with Melaka Corp & Jakel to deliver 1,000MWac solar to German Tech Park over 5–7 years (Oct 2024)
• Heads of Agreement (HOA) with Terengganu Inc for 500MWac Hybrid Hydro Floating Solar at Tasik Kenyir (Dec 2024)
• Approval of revised tipping fee for WTE plant expected March 2025

Valuation: SOP-Based Target Price Lowered

A sum-of-parts (SOP) valuation approach is used, factoring in discounted cash flow for solar assets and a price-to-earnings ratio for EPCC earnings. The revised SOP-based target price is MYR0.88 per share (down from MYR0.94), reflecting reduced EPCC contributions.

Financial Position: Leverage, Cash Flow, and Key Ratios

• Net gearing (FY25A, including perpetuals): 117.4%
• Cash & short-term investments (FY26E): MYR133.6m
• Free cash flow yield (FY27E): 19.5%
• EBITDA margin (FY25A): 33.1%
• ROAE (FY26E): -9.7% (expected to recover to positive territory in FY27/28)

Operational Asset Portfolio

Cypark’s operational assets span ground-mounted solar, agriculture-integrated PV, building-integrated PV, floating solar, and WTE. Notable assets include:

• Pajam, N. Sembilan (various CODs, tariffs up to MYR1.0855/kWh)
• Rimba Terjun, Johor (COD 2012, tariff MYR0.95/kWh)
• Merchang, Terengganu (LSS3 Hybrid, 100MW, tariff MYR0.23/kWh, COD June 2024)
• Danau Tok Uban, Kelantan (Floating Solar, 60MW, MYR0.34/kWh, COD Jan 2025)
• WTE, Ladang Tanah Merah (15MW, 42-45 sen/kWh, COD Dec 2022)

Investment Case: Opportunities and Risks

Opportunities

• Pioneering position in Malaysia’s renewable energy landscape with 400MWp installed capacity
• Recurring cashflows from long-term PPAs
• Large pipeline of tenders and new projects (including BESS, LSS/NETR)
• Potential upside from WTE Phase 2 approval and tipping fee revisions
• Lower borrowing costs post-refinancing

Risks

• Delays in project commissioning (historical risk factor)
• Policy uncertainty regarding tipping fees and renewable energy incentives
• Volatility in solar module and storage system costs
• High dependence on large, lumpy projects could lead to earnings volatility
• Net gearing remains elevated, though expected to decline as recurring income builds

Conclusion: Cautious Optimism Amid Short-Term Pain

While Cypark Resources faces near-term challenges from weaker construction activity and slow WTE recovery, its strategic position in Malaysia’s renewable energy sector, robust asset base, and improving cost structure provide a foundation for future growth. Investors should watch for key catalysts such as regulatory approval for WTE expansion, successful tenderbook conversions, and the scaling of new projects. Until then, a HOLD stance is maintained, with a revised target price of MYR0.88 per share.

Historical Performance and Analyst Rating

Cypark’s share price has shown volatility, reflecting both sector and company-specific challenges. The current HOLD rating reflects a measured outlook, balancing near-term headwinds with medium-term growth prospects as Malaysia targets a major expansion of its renewable energy infrastructure.
For further information on Cypark Resources or specific queries, contact the analyst:
Nur Farah Syifaa
Email: [email protected]
Tel: (603) 2297 8675