The stock rose 4 sen to close at RM1.20 yesterday, valuing the group at RM927.73 million. This is just shy of its 52-week high price of RM1.23.
The attention Cypark has garnered has not gone unnoticed, attracting new investors like bees to honey.
The Social Security Organisation (Perkeso or Socso) emerged as the latest substantial shareholder of Cypark with a 5.49% stake in the company on Feb 7.
This follows a more significant move by Jakel Group’s investment arm to acquire a sizable stake in the company by way of private placement last month.
Cypark announced on Jan 4 that Jakel Capital Sdn Bhd had acquired 176.65 million new shares, or a 27.33% stake, making it the single largest shareholder.
At just 38 sen a share, the firm spent RM67.1 million on the acquisition, a shrewd piece of business in hindsight. Since Jan 4, the stock has surged almost 125%.
An estimated RM50 million from the transaction has been earmarked for the development of the large scale solar 2 (LSS2) floating solar photovoltaic projects at Tasik Danau Tok Uban (DTU) in Pasir Mas, Kelantan.
Strategic Bumiputera shareholder
The acquisition appears to be a mutually beneficial strategy, with Jakel Capital acting as a “strategic Bumiputera shareholder” for Cypark, with the waste disposal and renewable energy company diversifying the group’s investment portfolio.
The acquisition of such a large stake was cited by Cypark as the likely cause for the surge in its share price. Replying to an unusual market activity query from Bursa Malaysia on Jan 31, the company said it was not aware of any other possible explanation to account for the trading activity.
Jakel Capital had replaced little-known Chung Chee Yang as Cypark’s single largest shareholder. Chung first nabbed the title last September, and now has a 10.1% stake in the company. Nevertheless, his stake exceeds that of founder and current CEO Daud Ahmad, with 6.766%.
Founded by Razali Ismail and Daud in 1999 as Cypark Sdn Bhd, the company started as a waste management company that has now branched into renewable energy.
Pressure mounting on Cypark to deliver
While recent trading activity has positive implications for Cypark, the firm must deliver on its long-delayed projects, which had dented investors’ confidence in the past.
The commercial operation date (COD) for its floating solar plant in DTU is long overdue. Initially targeted for December 2021, it was postponed to May 2022, then to September and is now slated for May this year.
Questions were previously raised by market watchers regarding the need for Cypark to again raise funds for the floating solar plant project following an investor spook last May.
This saw the firm’s share price tank almost 50% from 69 sen on May 23 to a low of 34 sen on May 25. Bursa Malaysia temporarily suspended the short-selling of Cypark’s shares on May 24.
The crash was said to be largely due to concerns about its cash flow and being able to meet its debt obligations with the project delays. Cypark’s strategy of share placement exercises to raise the necessary capital has helped alleviate the concerns.
The achievement of COD for Cypark’s solar plant in Sik, Kedah, in January 2022 and biogas plant in Kampung Gajah, Perak, in December 2021 helped to further mitigate such concerns.
The group’s solid waste modular advance recovery and treatment waste-to-energy plant in Ladang Tanah Merah in Negeri Sembilan also reached its COD last Dec 14 after several delays.
Despite the challenges, Cypark remains profitable though higher logistics, labour and prolongation costs have dampened earnings.
The firm’s net profit fell 79.1% to RM5.4 million in Q4 FY2022 from RM11.8 million in Q3 FY2022, with cumulative profit for the current year to date down 15.2% to RM48.7 million.
With more renewable energy projects in development, Cypark needs to convince investors that it is now in a better financial position to successfully deliver on its projects.