Thank you, yoyo

As far as Jaks is concerned, the stronger the US$, the higher the earnings in RM term for Jaks. So, if US$/RM dropped to 2.80, Jaks earnings from Vietnam will drop. Having said that, it doesn't means Vietnam will earn less in term of US$ but it will be less when distributed and converted to RM. In short, strong US$/RM is good for Jaks.

I must admit I know very little about MFCB's PPA. I m not sure how forex fluctuation would affect its returns on investment.

Based on the output shown in the sustainability report, Mong Duong II only operated about 5300 hours in 2016 and 3150 hours in 2017. It was reported that Mong Duong II was shut down for 5 months in 2017 due to excessive rainfalls. It is not known whether Mong Duong II were facing technical difficulties during those periods. Nevertheless, the power plant remained profitable even in 2017 as capacity payment portion of the tariff payment is not affected by plant utilisation. However, plant utilisation has greatly improved as shown by the leap in distributions of US$145m in 2019 YTD from US$88m in 2018.

Vinh Tan 1 has about 7300 utilisation hours in the first year after full COD in November 2018.

I believe the 6500 hours is used to determined the IRR and payback period during project evaluation. I don't think the PPA would incorporate operation hours into tariff calculation. Tariff payment is based on electricity output as well as capacity made available.


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Hector99 Hi, DK66.
Most of your profit estimates for JAKS and MFCB are based on the foreign exchange rate of US$1.00 to RM 4.20. I wonder whether these two stocks would be still attractive investments if the exchange rate is suddenly pegged again to US$1.00 to RM 2.80, as in 1998.

Could you please kindly look into this Scenario? Thank you.
23/12/2019 5:35 PM

leapkcfy DK66,

Just curious, did Vinh Tan 1 and Mon Duong 2 suffer from high operation cost upon COD? and the PPA is at least 6500 hours? Tq
23/12/2019 5:44 PM

Agree with OTB, now it is more important to see the power plant successfully commissioned.

Yes
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DK66 calculate Jaks every quarter on its EPC work revenue and sum up total accumulated revenue to arrive progress billing now is up to 74% right?

I will double check on my calculation for progress billings

It should be more accurate to base on progress billings on Jaks' EPC2 contracts to estimate Jaks profit from vietnam

hng33, the IBs probably based on the progress billings on the project basis. I based on the progress billings by Jaks on its EPC2 jobs. I based on estimated total profit of RM440m about 23% margin.

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hng33 Hi DK66, both public bank and affin analyst in their research note said that jaks still only have less than 20% of the RM1.9bn EPCC contract to be recognized. The progress up to last Q3 is at 82% therefore outstanding billing is about 18% or RM 342m right? Assuming profit margin maintain at 22%, the balance pretax profit should be 75m, the net profit is 56m to be staggering recognized over next few quarter.
23/12/2019 3:05 PM

You are welcome

Dear OTB, noted

Newbiesi3,

Hng33 is right in so far as the anticipated slow down in progress billings on its vietnam EPC jobs. Total billings as at 30th Sept stood at around 74%.

Just a very logical estimation of progress billings for the next 5 quarters will be 7%,6%,5%,4%and 4% resulting in profit from vietnam of around RM31m, RM26m, RM22m, RM18m, and RM18m for the next 5 qtrs respectively.

So far, losses from property attributable to Jaks is around 8m to 10m per quarter. Assuming pacific star is completed by Q1 2020 and property operating loss attributable to Jaks reduced to 3m per quarter , the projected profit for the next 5 quarters would be around RM22m, RM15m, RM19m, RM15m, RM15m.

Note that the projection did not take into consideration profit from commercial operation of power plant in Vietnam which will start to contribute from Q3 2020 onwards.

Sure. please wait. outside now.

Balance 10% invested in Pimpinan Ehsan Berhad waiting for General offer.

Shareinvestor88,

My studies on Jaks is limited to its investment in the Vietnam Hai Duong Power Plant. I believe the returns from vietnam will overwhelm all its other domestic businesses.

If you are concerned about its trade payables, I suggest you find out whether the payables are mostly related to accounting entries for its vietnam EPC contracts which will have corresponding trade receivables recorded. They will eventually set-off each other when the power plant is completed.

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shareinvestor88 Hi DK66
what about the trade payables ?

DanielOng and Jilohhuat, Thank you

leapkcfy, you are welcome

Thank you all for your trust in me. It keeps me motivated to share more.

Provided steam blow test is successfully completed by year end as targeted, based on construction progress of Vinh Tan1, Unit 1 of the power plant is highly likely to achieve COD by May 2020

--------------------------------
leapkcfy May i know what is the chances of delaying the COD on may 2020 at current position. Tq
22/12/2019 9:27 PM

Ricky Kiat, Thanks for the info

Looks like the power plant is undergoing thorough checking in preparation for major testing event

I hope so. However, feel free to attack, not me but my articles !

firehawk,

You are welcome and thank you

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firehawk DK66, Thks for the info. u provided all the while ... at this stage i particularly appreciate yr posting picked from CPECC, every time i see the news about the project progress, i maintain my confidence in this counter ... this is the only down to the earth evidences that provide concrete facts ....

Disregard all the -ve comments here (which are mostly noise) and keep up yr work, i think, there are many silent readers like me, appreciate yr good work!
22/12/2019 9:54 AM

Choivo, thankful for sharing your thoughts.

If I may comment,

I agree that "Owners earnings" gives a better representation of a company's earnings and I also agree that it is extremely difficult to obtain "maintenance capex". However, I find it also difficult to agree with the "simplicity" you proposed below;

[ For the sake of simplicity, we are going to use “Total Comprehensive Income” for “Reported Earnings” and “Capital Expenditure & Acquisitions of Companies” as “Average Annual Maintenance Capital Expenditure”.]

It is dangerous to adopt such approach. You are almost certain to also group "Companies growing through acquisitions" under this category.

WB's idea of subtracting "Maintenance capex" as such expenditures do not increase the value of the assets in term of earnings capability but maintaining the status quo.

However, I think most would agree to take "Acquisition of companies" as acquisition of NEW assets which is suppose to improve future earnings. It is therefore not captured under WB's idea of "Maintenance capex".

Nevertheless, spending on acquisitions especially those that do not require shareholders' approval can raise governance issues. This will most definitely result in future impairment write-offs. As Serbadk is in a very volatile industry, the economic value of its assets can vary greatly. Therefore, management should be wary of excessive expansion through acquisitions during peak. This happened during the last boom and burst oil cycle.

This is only my personal view. I maybe wrong.

Thank you

pjseow, you are welcome

Happy Winter Solstice , 冬至快乐 to you and everyone.

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pjseow Haha DK, I cant find anyone better than you in knowing the indepth details of Jaks power plant. We are greteful to you for your generosity in sharing . Thank you so much.
22/12/2019 6:53 AM

Pjseow, haha, you were hoping she would said " I can't find anyone better", right ?

But that is my answer to "why do I keep promoting Jaks and not other stocks ?". Yes, I can't find any better stock than Jaks that can give me multibagger returns soon.

All the 16 were awarded. Not available unless terminated by government

WEunity, about 16 investment certificates on power plant were given out by the Vietnam government around 2010. Less than a handful managed to get off the ground. Many are still hanging in the air. Some only just started construction. Toyoink still haven't found its partner yet. BOT power projects were very slow on implementation due to financing difficulties. Vietnam is in desperate need for electricity, what can the Vietnam government do apart from granting extensions ?

Once a project secured financial close, an official construction start date will be agreed between the Government and the operators. The operator will have 48 months to complete Unit 1 and 54 months to complete Unit 2.

In Hai Dung case, official start date was 1st December 2016. Therefore, Unit 1 must be completed by 30th November 2020 and Unit 2 by 31st May 2021. After which LAD will apply. Mong Duong II was completed 5 months ahead of schedule and Vinh Tan 1 was completed 6 months ahead.

In addition, the performance of the power plant must meet the minimum threshold originally agreed with the Government. Penalties will be imposed on shortfalls.

Mong Duong II. Because it is also located in northern region of vietnam and having the same design as Hai duong.

But Vinh Tan 1 will still exhibit very high similarity as its PPA was signed just slightly later.

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ok Hi Dear DK66, in your opinion, Vinh Tan 1 and Mong duong II which one have the highest similarity with jaks hai duong powerplant in term of profit projection?
21/12/2019 3:28 PM

To all those supported me, Thank you

By the way, didn't you spot the error in Mr Koon's 58m profit calculation ? You were very alert on my calculations.

Dear Sslee,

Thanks for sharing your stock picks for 2020. I m glad that you finally added Jaks to your list.

I commented on insas as well

Prior to Jaks, I commented on TRIPLC, Rsena, clip, etc

Dear OTB,

Thank you for your confidence in me as well as those who defended me.

It makes me feel worthwhile of sharing my research information.

I believe in doing good deeds.

I agree with OTB that the current price is still cheap but I refrained myself from asking readers to buy now because I made a clear call when the price was less than RM0.80. I said "Either you buy now or you don't buy at all". Therefore, for those who hasn't bought please do not ask me whether you can buy now. Please spare me the pressure.

I will share information, good or bad, as and when they become available. I will try to analyse the information in the most meaningful and logical ways. The decision is entirely yours.

Thank you.

--------------------------
OTB DK66,
I thought to arrange a meeting will help us to understand Hai Duong power plant of Jaks better.
I read through all your reports, I feel that you are better than my friends in term of knowledge and my friends are very keen to meet you after reading so much of your good articles.

It is so sad that the meeting with you cannot be arranged successfully.
Do not worry, I still trust you the most.
Good Karma will come to you and you will be blessed with huge profit in Jaks.
I still buy Jaks today at 1.25, I do not afraid and I think the price is still cheap.
Thank you.
20/12/2019 11:44 PM

Dear OTB,

Thank for the invitation but I have to respectfully decline. Please proceed without me.

If you need any information from me feel free to ask here or thru e-mail. I will try my best to answer with all my knowledge.

Thank you.

P/S : I hope you can share the outcomes of your lunch/dinner discussion, if any, for the benefit of everyone here.

Why should I analyse and promote stocks that i don't buy ?? I promoted Jaks when it was RM0.50. Some attacked me for evil intention but these people already disappeared. It happened when the price was RM0.50 and RM0.80 and now it happens again.

Windy, I don't have any detail information on the indonesian power plant. The equivalent 2x1000MW power plant of toyoink cost about US$3.2b.

My research shows that the average costing for coal power plant is about US$1m per MW. Vietnam seems to be paying above average price despite government guarantee. Maybe it is because of the BOT arrangement where the operators can only recoup their capital and profit thru the 25 years operation.

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Windy1974 DK66. Indonesia power plant is cheaper i believe? Of course we need to take into consideration that Vietnam Hai Duong profit is guaranteed? Indonesia guaranteed?

TanDavid88, Noted and Thanks
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TanDavid88 DK66, please do not get affected by all sweeping statements.
Just ignore sweeping statement unless they talk with backup facts.
Good Karma will come to you for your good work done and sharing.

Paktua73, Thank You

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DK66 paktua stand salute..
real warriors spirit..
you're the man with lion heart..
tut tut
dk66..
anda berbakti tanpa lelah demi kebaikan semua..

I have been answering to requests for comments and replying e-mails without fail. I only talk about facts and I hide nothing. Am i evil ??

I began sharing my articles and information since Jan 2019 and I will keep sharing even when Jaks is 10 times the price now. I will share until the day I found nothing to share or after I quit.

Meanwhile, I will keep the readers here informed of all good and bad news and I will keep the readers here confident and not influenced by those with ulterior motives.

I believe the readers here know me long enough to judge for themselves.

https://www.china5e.com/news/news-1078344-1.html

今天(13/12/2019)，“一带一路” 重大能源合作再结硕果。拥有我国自主知识产权的火电机组——国家能源集团国华印尼爪哇燃煤电厂——正式投产。这是我国在海外投资建设单机容量最大的燃煤火电机组。
　　
印尼爪哇7号项目位于印尼爪哇岛万丹省，是印尼电力建设史上装机容量最大、参数最高、技术最先进、指标最优的高效环保型电站。项目总投资120亿元人民币，总装机容量2×1050MW(兆瓦)。从第一罐混凝土浇筑到首次成功并网，建设工期提前近4个月完工，展现出中国速度，项目更以先进的低碳、环保、数字化火力发电技术为全球能源合作提供了中国方案。

2 X 1050MW coal power plant in Indonesia costing US$1.7b (0.8m per MW) using Chinese technology compared to Jaks Hai Duong 2 x 600MW costing US$1.87b (1.6m per MW) also chinese technology.

This shows that investment in power plants in Vietnam have more superior returns. I believe this is due to vietnam's lower sovereign rating.

Kyou, you should not rely too much on figures from Business Sense article. This is because the calculation shown in the article is based on quick and rough estimation aimed only to give a very general idea of the huge potential return of Jaks' investment in the vietnam power plant.

I encourage you to focus on the valuations derived in my few previous articles especially the article "Jaks resources - peer comparison with Mong Duong II"

VIN3133, if they spent as much time as I did on Jaks, they are considered inefficient. Spending so much time just on one single stock is considered unworthy of their employment value.

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VIN3133 Usually, i notice that these IB analysts are young , not very detailed & well informed & in depth compared to DK66.. I take their TPs as general guide only . After all , they makan gaji saja .

Probability,

When carrying out the feasibility study on a project, you project the future cash outflows and inflows. It starts with year 0 which is the point of first cash outlay. Both the calculation of IRR and NPV will be using Year 0 as the reference point.

In this typical case, you have cash outflows in Year 0 to Year 4 then cash inflows from Year 5 to Year 29.

However, for our purpose of evaluation, you can use the NPV at the point of investment (as in NOW). Yes, we have the benefit of time value as we could be in Year 4 already.

That is why it is most beneficial to buy just before the commencement of inflows. Not only you benefited from time value of money, but also avoided the construction risks. However, you may have to buy at higher prices.

VIN3133, thanks for your interest. I did a range of businesses from computer hardwares, softwares, ferry business, Chinese herds, credit leasing. Now mainly investment in stocks and real estates.

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VIN3133 DK66, may i know what line of business are you in currently ?

No, I m not an engineer. I was a senior auditor with KPMG peat marwick, singapore.

After I resigned due to long working hours, I moved into business world.

I spent enormous of time reading into thermal power plant. In today's world, learning is easy with google. All you need is time and willingness to learn.

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mmk79 @DK66, looking at your articles and your deep knowledge in this field, may i know if you are an Engineer with steam cert qualification?
20/12/2019 11:45 AM

After the successful air leak test carried out by 8 Dec, I believe Unit 1 of the power plant is currently carrying out chemical cleaning and steam blow test. It will takes about 7 - 12 days for the tasks. Once completed, the boilers will be connected to the turbine and perform the turbine test. After equipment testings, the power plant is ready for synchronization and stress test. After which, it is commercial operation.

Pjseow, Well done ! Maybe Jaks could be the biggest contributor to your wealth.

If Andy owns more than 20% shares in Jaks, he will not be eligible for the LTIP anymore.

Repost comment from OTB

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OTB I agreed with DK66, it is a super deal for Jaks.
Andy Ang had done a super good job.
I had talked to him personally, he is very smart and mouth is super sweet.
A bird on the tree, he also can persuade the bird to come down.

Extract from uncle's article above - quoted below:
................................

The CEO Andy Ang:

I must say Andy Ang is an exceptionally clever and shroud business man to be able to secure the 1,200 MW power plant contract from the Vietnamese Government and completely sub-contract to the Chinese party who has the technical ability and financial capacity to complete the power plant, which is valued at about Rm 7.76 billion.

The most important consideration is that Jaks does not need to borrow money from banks to finance the project and does not need to lay a brick to construct the huge power plant. In fact, the Chinese Sub-contractor and JV partner pays Jaks Rm 454 million during the 3 years of construction. Now I understand Jaks has already received about one third of the Rm 454 million.

In my 60 years’ experience in the construction contracting industry, I have never seen such a juicy contract as Jaks’ power plant contract. As an independent power producer selling electricity to the Vietnamese Government at a profitable rate for 25 years.

Thank you.
19/12/2019 9:29 AM

12月16日，越南海阳2×600MW燃煤电厂工程二号机组2号锅炉主吊PZQ1400塔吊顺利拆除。
　　本次拆除施工历时9天，塔吊拆除施工属于“危大”工程，越南海阳项目部高度重视，认真落实施工措施、技术方案，做好隐患排查。针对塔吊安装过程中可能出现的安装难点，提前准备好应急措施，同时邀请厂家人员进场指导拆除工作。
　　二号机组2号锅炉主吊PZQ1400塔吊塔身独立高度56.8m，臂长60m，最大起重量60t，塔身节回转高度为101.6m。本次塔吊拆除采用塔身节自降方式，拆除前共安装两层附着，待剩余两节塔身节后再利用M2250履带吊配合拆除起重臂、平衡臂。
　　因PZQ1400塔吊基础紧邻厂区主干道，项目部认真策划拆运流程，最大程度减少塔吊拆除过程对现场道路通行的影响。二号机组2号锅炉主吊设备的顺利拆除，标志着越南海阳2×600MW燃煤电厂工程的锅炉主体吊装作业全部结束，大件设备及主要设备安装工作全部完成。