Cypark 3Q net profit falls as work progress slows from movement restrictions

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KUALA LUMPUR (Sept 30): Cypark Resources Bhd's net profit for the third quarter ended July 31, 2020 (3QFY20) fell 19.49% year-on-year (y-o-y) to RM16.15 million from RM20.06 million in 3QFY19 as pandemic-induced movement restrictions implemented by the government interrupted and delayed worksite activities.

Its net profit also declined 12.7% quarter-on-quarter (q-o-q) from RM18.5 million in 2QFY20.

Meanwhile, quarterly revenue stood at RM55.69 million, down 36.11% y-o-y from RM88.17 million and 26.48% q-o-q from RM75.75 million.

The group attributed its 3QFY20 performance to contributions from new specialist projects, plus the adoption of Malaysian Financial Reporting Standards 15 since 4QFY19.

The different phases of the Movement Control Order, however, slowed down site progress and hurt revenue as a result.

For the cumulative nine months ended July 31, 2020 (9MFY20), net profit declined 6.12% to RM49.2 million, from RM52.41 million in 9MFY19.

Revenue in 9MFY20 was down by 19.75% y-o-y at RM222.31 million, from RM277.04 million in the corresponding period last year.

On its prospects, Cypark said that demand for renewable energy is expected to strengthen each year and will one day exceed the growth of fossil fuel-based energy.

It cited the International Energy Agency's 2019 report which forecast that renewable energy would account for 30% of all energy production from 2040, from 8.5% in 2017.

"Although the impact of Covid-19 pandemic is expected to slow the progress of energy investment for 2020, the long-term push to tackle climate-change issues and move towards environmental friendly energy resources, would still put RE (renewable energy) fundamentals very solid for the future. This was also shown in Malaysia where the Malaysian government recently announced a tender for 1,000 MWac LSS4 to be implemented by end-2020.

"The key success factors for Cypark can be attributed to three underlying factors, namely more attractive government policies on RE, continued development of more affordable and efficient green technology globally, and dynamic market mechanism.

"For FY20, Cypark will strengthen further its capability in taking advantage of the above success factors to ensure it would continue its uninterrupted revenue and profitability growth experienced since 2012," it said.

Shares in Cypark were 0.56% or half a sen lower at 88.5 sen, valuing it at some RM417.91 million. It saw 407,800 shares change hands.

Lam Jian Wyn