A lot of information about Jaks surfaced recently through the additional information required by Bursa Malaysia as well as the 2023 annual report.

Some of the new information I found useful.

1.  Only RM285m borrowings were related to the 2 malls 
2.  The LSS4 solar farm took up a RM200m syndicated loan
3.  New billings of RM69m to JHDP in 2023
4.  Adjusted income of RM642m from JHDP (2022 : RM520m)

My opinion

• The RM200m loan related to LSS4 should not be a concern as the bankers has assured that the project is able to service its loan.
• The new billings in year 2023 to JHDP were very likely for the retention money related to the construction of the power plant. This amount is likely to be received in 2024.
• The ongoing private placement will raise around RM28m.
• JHDP is likely to distribute a total of RM200m to Jaks over the next 5 years.
• Thus, total cash inflow to Jaks over the next 5 years is estimated around RM300m.
• Although the net cash flow is still projected to be overall negative for the next 5 years, the shortfall is not substantial and manageable refinancing should fill the gaps.
• The good news is the share of adjusted income (adjusting for increase in interest expense due to increase in interest rate) from JHDP has increased by 23% over the previous year indicating that the income from the power plant is still growing. If and when the US interest rate reduces to the previous norm, Jaks' share of income from JHDP will grow to RM193m.
• US may start reducing interest rate in the 2nd half 2024, this will reduce interest expense for JHDP loan.
• My adjusted NPV using 10% discount rate works out to be around RM0.40 per share. The NPV will be much higher if a lower discount rate is used when the US interest rate reduces.
  

Therefore, it is my personal opinion that given the new information and circumstances, the risk reward is attractive at current price level.

BUY AT YOUR OWN RISK