@PureBull..

Difference between "speculator" and "investor' is not something discrete, the boundary is not clearly defined...it falls in somewhere in a continuous range between 2 extremes.

On the far left extreme - speculation means making a decision with poorly analyzed information..crude information.....with high uncertainty..

on the other far right extreme, investment means a well analyzed in-depth research made to justify a purchase decision predicting a future event.

the former is naturally short term in nature as the information can be easily overturned unlike the long term nature of investment where the fundamentals remains relatively more resilient.

Its up to one to choose where they want to be between these two extremes.

All of Dayang & Perdana's investment will never go waste being the pioneer in south east asian region.. US$ 30B market purely for decomissioning is not small

Posted by probability > May 9, 2020 1:57 PM | Report Abuse X

Southeast Asia braces for huge wave of decommissioning
......................................................

09/12/2019

https://www.energyvoice.com/oilandgas/asia/213619/southeast-asia-brace...

More than 200 offshore fields are expected to stop producing in Southeast Asia by 2030 with total decommissioning costs estimated to range from $30 billion to as much as $100 billion.



Petronas seeks priced information for decommissioning works
...........................................................

https://connect.ihsmarkit.com/upstream-insight/article/phoenix/1475433...

Petronas is understood to have issued a RFI (request for information) related to potential decommissioning programmes offshore Malaysia.

In January 2018, it was reported Petronas had plans for a decommissioning programme over a five-year period between 2018 and 2023. The operator was understood to have planned a work scope that covered some 26 structures and around 200 wellheads that had been identified for decommission over the timeframe.



O&G decommissioning works in big demand
........................................

03 Jul 2019

https://www.thestar.com.my/business/business-news/2019/07/03/og-decomm...

PETALING JAYA: As more oil and gas (O&G) fields in Malaysia and the region approach the end of their lifespan, the demand for decommissioning works is set to surge.

The value of decommissioning contracts in the region, over the next three years, is expected to reach up to RM6bil, according to estimates by industry players.

In its 2019-2021 activity outlook, Petronas noted the requirement for 50, 40 and 60 well abandonment for the local fields in 2019, 2020 and 2021, as well as the need for the dismantling of several platforms or facilities.

“Activities are expected to intensify as considerable assets have been operating beyond 40 years,” Petronas said in the report.

According to UOB Kay Hian, other indirect beneficiaries from well abandonment works are DAYANG ENTERPRISE HOLDINGS BHD, Petra Energy Bhd, Icon Offshore Bhd, Perdana Petroleum Bhd and DELEUM BHD



PETRONAS Activity Outlook 2020 - 2022:
.....................................

https://www.petronas.com/ws/sites/default/files/downloads/PETRONAS-Act...

refer page 56

Southeast Asia braces for huge wave of decommissioning
......................................................

09/12/2019

https://www.energyvoice.com/oilandgas/asia/213619/southeast-asia-braces-for-huge-wave-of-decommissioning/

More than 200 offshore fields are expected to stop producing in Southeast Asia by 2030 with total decommissioning costs estimated to range from $30 billion to as much as $100 billion.



Petronas seeks priced information for decommissioning works
...........................................................

https://connect.ihsmarkit.com/upstream-insight/article/phoenix/1475433/petronas-seeks-priced-information-for-decommissioning-works

Petronas is understood to have issued a RFI (request for information) related to potential decommissioning programmes offshore Malaysia.

In January 2018, it was reported Petronas had plans for a decommissioning programme over a five-year period between 2018 and 2023. The operator was understood to have planned a work scope that covered some 26 structures and around 200 wellheads that had been identified for decommission over the timeframe.



O&G decommissioning works in big demand
........................................

03 Jul 2019

https://www.thestar.com.my/business/business-news/2019/07/03/og-decommissioning-works-in-big-demand

PETALING JAYA: As more oil and gas (O&G) fields in Malaysia and the region approach the end of their lifespan, the demand for decommissioning works is set to surge.

The value of decommissioning contracts in the region, over the next three years, is expected to reach up to RM6bil, according to estimates by industry players.

In its 2019-2021 activity outlook, Petronas noted the requirement for 50, 40 and 60 well abandonment for the local fields in 2019, 2020 and 2021, as well as the need for the dismantling of several platforms or facilities.

“Activities are expected to intensify as considerable assets have been operating beyond 40 years,” Petronas said in the report.

According to UOB Kay Hian, other indirect beneficiaries from well abandonment works are DAYANG ENTERPRISE HOLDINGS BHD, Petra Energy Bhd, Icon Offshore Bhd, Perdana Petroleum Bhd and DELEUM BHD



PETRONAS Activity Outlook 2020 - 2022:
.....................................

https://www.petronas.com/ws/sites/default/files/downloads/PETRONAS-Activity-Outlook-2020-2022.pdf

refer page 56

Southeast Asia braces for huge wave of decommissioning
......................................................

09/12/2019

https://www.energyvoice.com/oilandgas/asia/213619/southeast-asia-braces-for-huge-wave-of-decommissioning/

More than 200 offshore fields are expected to stop producing in Southeast Asia by 2030 with total decommissioning costs estimated to range from $30 billion to as much as $100 billion.



Petronas seeks priced information for decommissioning works
...........................................................

https://connect.ihsmarkit.com/upstream-insight/article/phoenix/1475433/petronas-seeks-priced-information-for-decommissioning-works

Petronas is understood to have issued a RFI (request for information) related to potential decommissioning programmes offshore Malaysia.

In January 2018, it was reported Petronas had plans for a decommissioning programme over a five-year period between 2018 and 2023. The operator was understood to have planned a work scope that covered some 26 structures and around 200 wellheads that had been identified for decommission over the timeframe.



O&G decommissioning works in big demand
........................................

03 Jul 2019

https://www.thestar.com.my/business/business-news/2019/07/03/og-decommissioning-works-in-big-demand

PETALING JAYA: As more oil and gas (O&G) fields in Malaysia and the region approach the end of their lifespan, the demand for decommissioning works is set to surge.

The value of decommissioning contracts in the region, over the next three years, is expected to reach up to RM6bil, according to estimates by industry players.

In its 2019-2021 activity outlook, Petronas noted the requirement for 50, 40 and 60 well abandonment for the local fields in 2019, 2020 and 2021, as well as the need for the dismantling of several platforms or facilities.

“Activities are expected to intensify as considerable assets have been operating beyond 40 years,” Petronas said in the report.

According to UOB Kay Hian, other indirect beneficiaries from well abandonment works are DAYANG ENTERPRISE HOLDINGS BHD, Petra Energy Bhd, Icon Offshore Bhd, Perdana Petroleum Bhd and DELEUM BHD



PETRONAS Activity Outlook 2020 - 2022:
.....................................

https://www.petronas.com/ws/sites/default/files/downloads/PETRONAS-Activity-Outlook-2020-2022.pdf

refer page 56

Answers to such query had been provided numerous times.

its easier you make your own judgement by the expected earnings of 196m at 30% stakes and high certainty of it becoming 40% stakes.

This should be the answer on that from now on


Posted by Rookieinvestor > May 9, 2020 11:36 AM | Report Abuse

DK66, most of us are only keen to know whether to buy , hold or sell and the target price.The majority of us who would not read the whole article if it is pages and pages long. Maybe there are a few who would but i believe majority of us would not continue reading after a first few paragraphs unless they are in this field or expertise. At the end of the day, you must understand the audience who are reading your article are not as knowlegable as you in this topic and only confuse themselves on whether to buy or not

as a summary, i think we can breakdown JAKS analysis into two:
.............................................................


(1) Observed performance.

This will be like looking at Vinh Tan 1 earnings and Mong Duong 2 which are almost identical.

To me this part is almost done deal - closed.


(2) Develop a financial model:

This can be shown using the IRR reported or other PPA conditions...

To me (1) is straight forward, and the (2) is still in development state... at the moment i can obtain reported earning with project IRR of 15%... but DK66 seems to have a different model...

I am still learning on this

well said.

I was just about to comment on that

Posted by DK66 > May 9, 2020 12:16 PM | Report Abuse

Dear Sslee, I thank you for your participation. As i have said, I won't be able to address concern on human behaviour or motives.

Below is June 2019 article, but becomes more relevant with Sarawak opening up with recent positive development with Petronas.

https://www.maritime-executive.com/article/malaysia-potential-future-gas-shortfall-should-spur-investment

According to research by natural resources consultancy Wood Mackenzie, the multiple breakdowns in the Sabah-Sarawak gas pipeline and a delayed final investment decision (FID) on the large Kasawari offshore gas project have resulted in short-term supply crunch to the Bintulu MLNG plant. This supply shortage is expected to continue though to at least 2025


"This is a golden opportunity for upstream players to swiftly bring gas onstream and jump ahead of the queue: either in the form of increasing existing production, or by developing smaller discoveries to tie into existing infrastructure

Malaysia has proved itself to be the hottest spot for material exploration in Southeast Asia over the last decade, says Rodger. Between 2010 and 2018, Malaysia had the largest annual new reserves added through exploration in six of those years. Of the 11.2 billion barrels of oil equivalent discovered in Southeast Asia through that period, around half was found in Malaysia, highlighting its enormous exploration potential.

"We expect Petronas to ramp up its own exploration efforts, particularly in deepwater Sarawak, to prove up easier-to-develop resources. It will also invest in new technology to develop some of the more challenging accumulations," said Rodger.

Below is June 2019 article, but becomes more relevant with Sarawak opening up with recent positive development with Petronas.


https://www.maritime-executive.com/article/malaysia-potential-future-gas-shortfall-should-spur-investment

According to research by natural resources consultancy Wood Mackenzie, the multiple breakdowns in the Sabah-Sarawak gas pipeline and a delayed final investment decision (FID) on the large Kasawari offshore gas project have resulted in short-term supply crunch to the Bintulu MLNG plant. This supply shortage is expected to continue though to at least 2025


"This is a golden opportunity for upstream players to swiftly bring gas onstream and jump ahead of the queue: either in the form of increasing existing production, or by developing smaller discoveries to tie into existing infrastructure

Malaysia has proved itself to be the hottest spot for material exploration in Southeast Asia over the last decade, says Rodger. Between 2010 and 2018, Malaysia had the largest annual new reserves added through exploration in six of those years. Of the 11.2 billion barrels of oil equivalent discovered in Southeast Asia through that period, around half was found in Malaysia, highlighting its enormous exploration potential.

"We expect Petronas to ramp up its own exploration efforts, particularly in deepwater Sarawak, to prove up easier-to-develop resources. It will also invest in new technology to develop some of the more challenging accumulations," said Rodger.

PM hails Petronas-Sarawak deal, says it allows for further development of O&G sector in the State

May 08, 2020

https://www.theedgemarkets.com/article/pm-hails-petronassarawak-deal-says-it-allows-further-development-og-sector-state

PM hails Petronas-Sarawak deal, says it allows for further development of O&G sector in the State

May 08, 2020

https://www.theedgemarkets.com/article/pm-hails-petronassarawak-deal-says-it-allows-further-development-og-sector-state

the additional stakes Jaks could acquire and the return from the acquisition (in terms of PE)

Posted by Aseng > May 8, 2020 3:30 PM | Report Abuse

Sarifah, aku tak berepa faham soalan mu

apa maksud 10% profit projection, banding dengan data apa?


SarifahSelinder// DK66, Given ur profit projections10% ni kan dibeli at PE apa agak nya?

agree, there is just no other person more capable than him...

Posted by teoct > May 8, 2020 1:45 PM | Report Abuse

Tun, please retire for Malaysia.

Please please, enough, let the next generation take care of themselves, please.

https://www.thestar.com.my/news/regional/2020/05/08/after-swift-virus-success-vietnam-is-open-for-business

yeah....best is if they can show some sign that thwy will increase their stakes to 40%

may be sifu OTB can dig this info

Glad to hear this.

Did buy some JAKS today..

Posted by DK66 > May 8, 2020 11:52 AM | Report Abuse

For mong duong II, capital distribution will most like be made towards tail end of the concession period.



Posted by DK66 > May 8, 2020 11:51 AM | Report Abuse

Accountant must be careful with their definitions otherwise their backside can be exposed.

But in Mong Duong II case, I can assure you that it is quite safe to refer cash distribution as dividend.

-----------------
Aseng cash distribution is a very vague term
we got to get it right first
08/05/2020 11:41 AM

ok thanks DK66,

their cash distribution for 2019 did come to the profit level Vinh Tan 1 reported

if this is true, you can establish a very high degree of certainty that Hai Duong can perform similarly

the IR of AES corp did not want to reveal much to me unfortunately


Posted by DK66 > May 8, 2020 11:36 AM | Report Abuse

Because Mong Duong II used the term "distribution", It is most likely dividend in nature

@aseng, i dont know..thats why i am discussing with DK66

ok then you did talk about Mong Duong profit, but the only source of info we have is cash distribution from their reports

so i am puzzled where you are getting this profit numbers

ok not assumption, but evident then

any reasoning - why the cash distribution is considered as profit

e.g, payout dividend payout cannot exceed profit? is the cash distribution the first place equivalent to dividend?

as such, you are of the opinion the cash distribution will be about the same as their profit and not their free cash flow i guess.

any justification on the above assumption

DK66, are you able to see Mong Duong 2's profit for 2019.

What i checked with the IR is that its only cash distribution show on their reports.


Posted by DK66 > May 8, 2020 10:17 AM | Report Abuse

I am accountant, I know accounting treatment can have profound effect on the reporting of earnings especially when dealing with a transaction which spans as long as 25 years. Mong Dong II started operation in April 2015 and has written back as much USD203m when it adopted the new accounting standard in 2018 with USD40m increase in profit in 2018 alone as a result of change in accounting treatment.

Vinh Tan 1 is still using the old accounting standard. If JHDP is adopting the new accounting standard, It may be reporting higher profit than Vinh Tan 1.

thats like 40% lower than Vinh Tan 1

trust it does give some weightage on my estimation that Hai Duong earnings could be 'much much' lesser than Vinh Tan 1

contohnya Klu you lihat free cash flow of Vinh Tan 1 is around 981m

tapi cash distribution from Mong Duong 2 cuma RM 621m

so kemungkinan ada perbezaan ketara antara subcritical and supercritical plant seperti yang saya cuba terangkan

sarifah, kamu yg kata Hai Duong and Vinh Tan 1 is apple to apple...tapi i kata Vinh Tan 1 pine-apple sebab i estimate IRR dia around 16%

sebab tu i kata jangan banding dgn Vinh Tan 1

Klu you ada bukti IRR Vinh Tan 1 sama at 12%...then berita baik la untuk Hai Duong...

harap mengerti

please share the source of the IRR information you have for Vinh Tan 1

sorry sarifah, where is the info that EVN guranteed 12% IRR to Vinh Tan 1?

kindly share

@sarifah:

best thing is we can derive Mong Duong 2's earnings

what we have is cash distribution currently

In my opinion Mong Dong 2 will be an apple to apple comparison

Vinh Tan 1 is a pine-apple

jangan marah dengan i

@aseng, relative evaluation could be more reliable.

However, its good to have a model to explain the observed so that you can use the model elsewhere reliably....

No matter what, you are definitely a gem in i3 and i appreciate that a lot. The most sincere & hardworking information provider in i3 - no doubt about it.

Thanks DK66

i have nothing to convince the readers other than myself

Fine DK66, i think this the limit of answer on my query

I dont promise anything now on the table (most likely wont post)

like i said it has no gain to me


Posted by DK66 > May 7, 2020 3:51 PM | Report Abuse

Probability, My absolute answer is the interest cost must be included in the calculation of project IRR. Otherwise, Vinh Tan 1 would not have achieved its 2019 results of RM652m. That is affirmative.

By the way, are we expecting an IRR table from you ? I don't want the readers here to wait for nothing.

yes they compare EIRR with Equity return rate expected - the equity hurdle rate (cost of equity)

they will compare PIRR with WACC - the complete project hurdle rate

i cant see your explanation


Posted by DK66 > May 7, 2020 3:46 PM | Report Abuse

The fact is they are including the interest cost for calculation to establish the desired IRR to compare against the hurdle rate of 10%.

Again, I think we should discuss further when you complete your article.

appreciate a straightforward answer: yes/no on this

you are above statement saying that there are many versions on this and its debatable seem really vague for such a well established financial definition


Posted by probability > May 7, 2020 3:16 PM | Report Abuse X

let me ask a straight forward question:

do you not think that the Project IRR of 12% should be derived using FCFF excluding the interest (Debt structure)?

you mean posting it here? I dont know how that can be done..

If i have find sometime , i will do that

Posted by DK66 > May 7, 2020 3:39 PM | Report Abuse

Since you have done the table, it is best we speak base on your table rather than speaking blindly ? Can you take the trouble of presenting your table in an article. The alignment will be preserved in the article by taking an image of your table. No trouble

DK66, the page 21 on pdf is only stating that for EIRR (Equity IRR) they will use the interest. I do not see any contradiction on that with what we had been discussing on Project IRR (PIRR).

If you see on the same pdf, they are excluding the interest effects to see the Project IRR (PIRR) to compare with WACC

@aseng:

http://www.china.org.cn/business/2017-07/19/content_41245688.htm

The coal-fired power plant includes two 600-MW super-critical generating units, which are expected to be put into operation in December 2018 and June 2019, said Chen Lianqing, general manager of the Vinh Tan 1 Power Company Ltd., a consortium of China Southern Power Grid, China Power International Development and Vinacomin-Power Holding Corporation, a subsidiary under Vietnam National Coal-Mineral Industries Corporation.

@aseng:


https://www.zawya.com/mena/en/project/250319031117/2-x-600-mw-hai-duong-coal-fired-thermal-power-plant-project/

The project covered the construction of a 1,200MW power plant, a powerhouse, 2 600 MW subcritical generating units, sub-stations, 4 CFB boilers, laying of transmission lines, installation of turbines and installation of generators. The project adopted the form of EPC+ Build-Operate-Transfer mode.

all the financial information shows that Project IRR should use FCF-F

perhaps you have some other underlying reason to include Interest due to special nature of PPA condition

seriously i dont know what is the reason you are not explaining that

I am fairly confident on the Project IRR and FCFF link but not on the PPA condition like you are aware

let me ask a straight forward question:

do you not think that the Project IRR of 12% should be derived using FCFF excluding the interest (Debt structure)?

DK66, i am not posting because, i have to spend sometime to touch up the column headings and its not nice to post in a blog purely to dispute something in a negative manner. You naturally dont have the energy to do something that has no gain to self...

But we can easily have an idea by looking at Icon's IRR article.

I am commenting here on my opinions freely....so that if you can convince me otherwise, its a great opportunity to invest in JAKS.


Posted by DK66 > May 7, 2020 3:02 PM | Report Abuse

probability, you surely have done the table if you know Vinh Tan 1's IRR is 16%. Can we take a look? It will be more convincing.

@aseng, the problem is Vinh Tan 1 achieved that with a Project IRR of about ~16% (under exceptional dry season and 95.8% load) and JAKS management is only promising 12% (since they have subcritical plant unlike supercritical Vinh Tan 1 considering practical utilization rate)

Understand how one derives Earnings based on FCFF worked back from given project IRR.

I would lean on Vinh Tan 1 earning figures if JAKS say they can obtain 16% Project IRR.

The below gives step by step sample evaluation:

Project IRR and Equity IRR: A Curious Connection

https://feasibility.pro/project-irr-and-equity-irr-a-curious-connection/


Calculation of the internal rate of return considering only the project cash flows (excluding the financing cash flows) gives us the Project IRR.

From my calculation its possible with an IRR 15% by increasing the gap between cashoutflow and future inflow.


Posted by DK66 > May 7, 2020 2:24 PM | Report Abuse

probability, to exclude the interest cost, Vinh Tan 1 would not have achieved its latest results. Which is more convincing ?

Nope - but i think you may want to see only what you want to see.

Although most of the time i see you are open to other contrary opinions.

Guess, its because (If true) the implications is profound.


Posted by DK66 > May 7, 2020 2:08 PM | Report Abuse

Probably, I hope you are not implying I m hiding something.

Ok fine DK66, no issues if you are not presenting the table. Its a lot of work i suppose.

However, hope i can conclude that the only argument you have that we should use FCF-E on Project IRR given by management of 12% is because, FCF-F will wipe out the Earnings significantly below Vinh Tan 1.

I have not seen you presenting any other information to substantiate that we can use FCF-E for Project IRR calculation.

@aseng, the earnings is worked back from FCF-F in order to match an IRR of 12%.

IRR 12% is fixed, Icon had used FCF-E to show that.

This will have a significantly reducing effect on Earnings estimated by Icon.

DK66, take your time, i have done on my spreadsheet but it will not be like from a professional accountant.

I do not why you had hesitation on this right from beginning.



Posted by DK66 > May 7, 2020 1:53 PM | Report Abuse

probably, I will appreciate if you can do the job. I m busy.

Please show this on a Table like what Icon did.

Infact the first ever article you should have made on JAKS is on the cash flow based IRR of 12%, since this is the only information we have from management on what to expect directly.

This is the single most important - convincing information.
.............................................


Posted by DK66 > May 7, 2020 1:40 PM | Report Abuse

I m sure if you exclude the interest cost from Vinh Tan, the project IRR will be far far higher than 15%