PublicInvest Research

Jaks Resources Berhad - Vietnam EPC at 93% Completion

PublicInvest
Publish date: Fri, 28 Feb 2020, 12:28 PM
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An official blog in I3investor to publish research reports provided by PublicInvest Research team.

All materials published here are prepared by Public Investment Bank Berhad. For latest offers on Public Invest trading products and news, please refer to: https://www.publicinvestbank.com.my/pbswecos/default.asp

PUBLIC INVESTMENT BANK BERHAD (20027-W)
9th Floor, Bangunan Public Bank
6, Jalan Sultan Sulaiman, 50000 Kuala Lumpur
T 603 2031 3011 | F 603 2272 3704 | Dealing Line 603 2260 6718

JAKS Resources’ (JAKS) 4QFY19 net profit, as expected, slowed down to RM17.8m (NM YoY, -28.7% QoQ) which was within our expectation but below consensus. In FY19, Group net profit came in at RM108.6m (>100% YoY) which constituted 96% and 90% of our and consensus full year estimates. The overall completion for its power plant in Vietnam is said to be at 93%, from 82% a quarter ago. We understand that the completion of its first unit which was initially thought to be by end-2019 is now postponed due to Covid-19. The commercial operation date (COD) is now targeted for 3QFY20, from 1HFY20 earlier. As such, we revise our FY20/FY21earnings downwards by -41%/-29%. We also change our valuation method from SOTP to RNAV as JAKS’ value is now mainly driven by its power plant, versus various business units previously. Maintain Neutral, with TP increased to RM1.13, from RM1.00 previously (pegged at 35% discount to RNAV) on lower completion risks of its power plant. All told, we are still wary over the various dilutive equity fund raisings done so far to meet its liquidity demands and the poor execution especially on its property business.

  • Power plant at 93% completion. EPC contract revenue and net profit, as expected, continued to slow down with the Group recognizing RM166.9m revenue and RM32.9m net profit in Q4FY19. For FY19. The Group recognized RM1.1bn (+62.3% YoY) and RM108.6m (+607.6% YoY) from the EPC contract. It still has RM338m remaining to be billed with the power plant expected to be completed by 2020.
  • Outstanding orderbook at RM618.6m. In the absence of new jobs, the Group’s outstanding orderbook dropped from RM847m to RM618.6m in 4QFY19. This is in line with the Group’s strategy to re-focus its resources on the Vietnam power plant project.
  • Property LAD to end in FY20. Property losses could drag longer but we understand that Management is still working to complete the Star Tower and the remaining 3 blocks by 1H2020. Unbilled sales as at 4QFY19 stood at RM130m. Occupancy at the Evolve Concept Mall dropped to 72% from 85% with committed tenants at 86%.

Source: PublicInvest Research - 28 Feb 2020

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Be the first to like this. Showing 4 of 4 comments

probability

Post removed.Why?

2020-02-28 12:46

probability

we understand that the completion of its first unit which was initially thought to be by end-2019 is now postponed due to Covid-19. The commercial operation date (COD) is now targeted for 3QFY20,

............

since when was the commercial operation targeted end 2019?

The placement to the grid is as always as planned Mid March 20 and commercial operation by May/June 2020.

How the heck coronavirus can have effects on a targetted operation end of 2019 when it only came to know early 2020?

How can coronavirus effect scheduled plant operation? Vietnam is one of the best country in terms of control placed and the infections there had become nil for sometime.

exploitative and misleading justification from PB

2020-02-28 12:56

firehawk

This pbb invest is lack of foresight, may be this is what IBs should do, when operate and reported money inflow, they only will adjust the TP ... is a bit late for investors .....

the 93% completion, basically was last yr progress ... do not where it got the info. about covid-19 affects the project?

2020-03-01 01:55

ming

China worker unable to join + material from china unable to export..

2020-03-01 02:40

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