Cypark confirmed today it had successfully completed its placement of 176.65 million new shares for RM67.1million.
This strategic investment by Jakel Group was undertaken via private placement exercise initiated by Cypark in November 2022.
“This investment marks an important milestone in Jakel Group’s journey to strategically rebalance its investment exposure in existing textile trading and wholesale, and property development businesses with the incorporation of environmental, social and governance (ESG) investing into its portfolio,” Jakel Capital CEO Muhammad Ashraf said in a statement.
“Through Cypark, we now have a platform and a role to play to advance Malaysia’s climate and sustainability agenda in achieving environmental sustainability by 2030,” he added.
In its filing with Bursa Malaysia today, Cypark said it views Jakel Capital as a new strategic Bumiputera shareholder who will help preserve its status as a Bumiputera-controlled public-listed company and will be a long-term investor of Cypark.
“With the support of a strong Bumiputera investor like Jakel Capital, Cypark expects to further optimise our strategic market position, enhance our shareholders base, expand and strengthen our business presence locally and regionally,” it added.
Cypark’s attractive valuation
Jakel Capital said that relative to its peers that are currently trading at more than 20 times price-to-earnings ratio (PER), Cypark is trading at an attractive valuation of approximately 8.5 times PER, supported by its ongoing concession assets that provide certainty to its revenue generation for years to come.
“It currently owns and/or operates close to 150MW of renewable energy assets, and with multiple construction of new power plants due for completion and approval, and this capacity will increase to more than 400MW by mid-2023,” it said in a statement.
As at Oct 31, 2022, Cypark’s net assets attributable to owners of company stood at RM2.14 per share. At the close of trading today, its share price rose 1.5 sent to 54 sen, valuing the company at RM319.1 million.
“Cypark remains fundamentally strong and the private placement exercise provides itself with an opportunity to improve its gearing and optimise its capital structure.
“Furthermore, the technical expertise of Cypark’s construction and engineering arm and its past involvement in landmark projects are worth leveraging for upcoming infrastructure jobs in the country.”
Placement exercise addresses cash flow concerns
Jakel Capital added the private placement exercise would provide Cypark with infusion of capital. This includes RM50 million earmarked for the 98MW solar photovoltaic projects in Kelantan slated for completion in May 2023, and the remaining sum for working capital requirements of the 20MW integrated waste-to-energy plant in Negeri Sembilan.
This addresses earlier concerns on project cash flows and delays, it added. Throughout 2022, Jakel Group had deployed approximately RM100 million of its funds towards investing in the local equity markets, both private and public.
Stepping into 2023, it remains positive on domestic markets by allocating an additional RM150 million of internally generated funds to Jakel Capital to invest in target sectors namely healthcare, food security, technology and smart manufacturing as well as green and sustainable industries.
Muhammad Ashraf remains bullish on the Malaysian economy. “Despite the economic headwinds, we believe 2023 will still present us with attractive investment opportunities, particularly in recession-proof industries with stable returns,” he said.
As part of its social responsibility to encourage entrepreneurship among local talents, Jakel Capital is dedicating RM10 million out of the 2023 investment allocation to invest in high potential start-ups and SMEs.