KUALA LUMPUR (April 1): CIMB Research has maintained its “Add” rating on Cypark Resources Bhd at RM1.97 with a lower target price of RM2.37 (from RM3.09) and said Cypark's 1Q15 core net profit of RM8.5 million was below house expectations, accounting for only 16% of CIMB Research’s full-year FY10/15 earnings forecast.
In a note today, the research house said the main reason for the variance was the higher-than-expected operating costs, which CIMB Research now imputed into its forecasts.
“Our FY15-17 EPS estimates are reduced by 32-33% as a result of our lower net profit forecasts and the higher share base as Cypark has completed its private placement.
“Hence, our SOP-based target price is cut to RM2.37 (from RM3.09). Despite the weaker-than-expected results, Cypark remains the best proxy for renewable energy (RE) exposure in Malaysia.
“We thus maintain our Add call. Securing more RE projects will act as a rerating catalyst for the stock,” it said.