ok got it, thanks DK66

take it as payment of US$ 120M then.....so then they have to fork out US$ 77M per annum for principal payment?

so the US$ 120M profit is excluding any principal payments to the loan?

DK66, at the end of 25 years who owns the Debt of US$ 1.4 Billion?

Posted by DK66 > Apr 14, 2019 8:05 PM | Report Abuse

Dear Sslee,

The ownership of the power plant will be transferred to MOIT, vietnam after 25 years regardless. Coal power plant has an average lifespan of 40 years.

I m indeed surprised that your concern can be so "indepth" and "far reached".

It is never too conservative ?

---------------------------------------

P/S: For 25 years BOT; it mean after 25 years all the plant equipments and land return to Vietnam state. The EVN Vietnam will take over and run the plant if it is still efficient and economical to run it, otherwise JV will need to de-commission and dismantle all the plant equipments.

OK thanks DK66...

S&A i meant as labour cost...coal power plants is labor intensive

nicely worded there...'renting'

hope you are sure about no.3, breakdown should be supplier's responsibility right?

and what about the S&A costs - who cushions it if it goes up?

renting without any risk to the equipment supplier?


Posted by DK66 > Apr 14, 2019 7:26 PM | Report Abuse

The vietnam is paying to buy;

1. The coal power technology,
2. The capital costs for the plant
3. Maintenance and management of the plant

or put it simply,

To rent "electricity equipment" from china/Malaysia with an option to purchase at the end of 25 years at 0 cost.

-------------------------------------------
probability To summarize the below message of yours DK66.

Its like Vietnam Govn is giving you the 150M just to 'manage' properly these plants you had made isn't it?

If you dont manage it well..you bear the consequences.

You dont get anything extra......from market supply and demand.

To summarize the below message of yours DK66.

Its like Vietnam Govn is giving you the 150M just to 'manage' properly these plants you had made isn't it?

If you dont manage it well..you bear the consequences.

You dont get anything extra......from market supply and demand.

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

Posted by DK66 > Apr 14, 2019 4:29 PM | Report Abuse

What I meant was the tariff structure is clear;

Total tariff = Fixed payment based on dependable capacity + Output Payment based on electricity produced + Fuel costs pass thru

How could a fixed tariff (per Kwh) fit into the equation ?

Its mentioned in news they are subsidizing for encouraging such investment...

It is acceptable to me too.

But, as an investor without a meat...its not encouraging to me at current electric pricing and fuel (coal) costs.

In a nutshell...Vietnam government is being super smart to finance it this way with absolutely no risk from their side.

If you are purely satisfied with earnings from subsidy and not hinting on potential higher earnings (false optimism) , then i have nothing to debate against your opinion.

DK66, with great respect on you...i really do not know what you had meant by the below...since i am not from accounting background familiar with IPP contract terms.

But, i could not identify..where is the meat for JAKS to obtain 150M profit if not purely from subsidy.

Earnings from subsidy does not sound attractive to me.

We should really investigate...how can this business be profitable?

I will give some clue to start the investigation..

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

Posted by DK66 > Apr 13, 2019 6:07 PM | Report Abuse

Probability,

I regret to tell you that I believe your effort was not on the right track.

In simple term, the tariff payment = Capacity payment + Output Payment + Fuel costs

It doesn't work on tariff per KwH basis.

well obviously now the share price does not believe on the contract...neither do Mr.Koon (an engineer who visited the site)..

by the way...sifu OTB (who also visited) was not convinced either...he smells rat from a distant very easily...

May be we should invest on solar panel supply companies in Vietnam

with OIL the costs is already VND 5,000/kWh....discount half of that for COAL...thats about 0.10 USD/kWh....

JAKS profits of 150 M can only be purely at the mercy of someone.

The below news end of last year Dec 2018 should give a clear overview:

Vietnam may increase electricity prices next year

https://e.vnexpress.net/news/business/industries/vietnam-may-increase-electricity-prices-next-year-3847868.html

As the cost of each kWh of electricity generated from oil is nearly VND5,000 ($0.2), while the current electricity price for households is only VND1,720 ($0.13) per kWh, this will cause significant loss to the utility, he claimed.

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

Another factor that could affect electricity price in 2019 is a 5 percent increase to coal prices that would come into effect this month, Tuan said.

"Coal accounts for a significant proportion of electricity's production cost so this exerts a huge pressure on the electricity industry. When developing a scenario for electricity prices we have to take all these costs into account."

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

According to his calculations, if each household installs panels capable of generating 3-5 MW, they would have enough electricity for their daily lives.

"Promoting home solar power will partially solve the issue of electricity shortage in the south," Tri said, adding that he hopes the government would soon issue relevant regulations so EVN could develop deployment plans, determine prices and technical standards of solar panels for consumers to install.

remember the current Coal pricing is when the oil price is still low....

i could not imagine when the Oil price hit 100 USD/brl....

now way Coal can remain at this price level.

1. Energy content of coal is given in terms of KiloJoules (kJ) per Kilogram (kg) of coal as the Gross calorific value (GCV) or the Higher Heating value (HHV) of coal. This value can vary from10,500 kJ/kg to 25,000 kJ/kg depending on the quality and type of the coal.
2. Efficiency of the boiler and combustion varies from 80-90%
3. Steam Turbine efficiency/conversion varies from 32-42%.
4. Parasitic load, transformer loss, line loss and own power usage.
5. Operation day per year 330 days. 35 days for preventive shut down maintenance.

.....

On the above shared by Sslee, the max energy conversion efficiency is 38%. Which is inline with all literature you can find in the whole world.

1 kWh = 3600 kJ

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

Try to workout the minimum and max coal required to produce 1 kWh? and the cost......

you all dont play play with COAL power plant:

https://www.brighthubengineering.com/power-plants/22202-burning-coal-in-power-plants-calorific-value-and-moisture/

It indicates the amount of heat that is released when the coal is burned. The Calorific Value varies on the geographical age, formation, ranking and location of the coal mines. It is expressed as kJ/kg in the SI unit system. Power plant coals have a Calorific Value in the range of 9500 kJ/kg to 27000 kJ/ kg.

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

you can lie on accounting but not on physics law.

do you all know what the above means at cost of coal of at VND 2.6 Million per ton?

I have not studied MFCB profit projections...but if JAKS's 150 M could turn out to be true...i will wholehearted believe on MFCB's - not a single doubt.


Posted by DK66 > Apr 14, 2019 1:20 PM | Report Abuse

I have another interesting question. There's a lot of doubts on profit given by Jaks management, but no one doubted MFCB's profit projections ??

his instincts had proven reliability time after time......

he score goals from a distant of 100 meters...unlike others who couldnt ..even at 100 cm.

I heed stockraider's advise...his instincts provide better certainty than any others....

aiyo dragon...i am pretty sure jesus will reserve a seat in heaven with many angels for you...not sure about calvin..kiki

Posted by dragonslayer > Apr 14, 2019 10:20 AM | Report Abuse

Aiyo..calvin kor kor...can dun link bursa gambling with your evangelist job or not...aiyoyo...not really tally lah..bursa is like a casino..mlm scheme lah...gambling leh...some win..some lose...you keep promoting gambling in bursa...with so many followers...macam not so good leh..followers win gambling..other lose gambling...zero sum leh..you bring them to church lah...not bring them to casino leh....lol...aiyoyo...kikiki

Sarifah....check yourself...i am lazy to prove a sell call...its the onus of the buy callers to provide...

you can anggap sampah or pink diamond if you want...up to you

Posted by SarifahSelinder > Apr 14, 2019 10:04 AM | Report Abuse

LOL Sarifah about to ask for u to provide MFCB detailed profit for Sarifah to kaji

lets see qqq3 or DK66 might have some logical explanation from where this subsidy amount will come....

then i am convinced...

by the way a lot of power companies do show good profit...just not sure how they are deriving it...and if its from coal...

it could be that MFCB is paying something extra cost currently we are not aware incorporated on its 'fixed + variable cost' (3) above...

Icon, i wont win you for sure...but bear with the poking and teasing here...unless you have some interesting info to enlighten me - who is truly blur with JAKS here....he he

FULL SUMMARY:
..............


1) MFCB Selling Price of electricity (Max):

= 0.080 USD/KwH (1)


2) MFCB net profit, adjusted as per debt structure of JAKS:

= 0.023 USD/kWh (2)


3) MFCB cost of production, 'variable + Fixed' distributed per kWh:

= (1) - (2)
= 0.057 USD/kWh (3)


4) The additional variable cost of production due to Coal by Jaks above MFCB is at least:

= 0.047 USD/kWh (4)


5) It is known from literature that hydroelectric variable operating cost is less than 0.010 USD/kWh compared to coal gasification at 0.04 to 0.080 USD/kWh

refer Table 3 page 33 of link below:

https://www.usea.org/sites/default/files/Operating%20ratio%20and%20cost%20of%20coal%20power%20generation%20-%20ccc272-1.pdf


6) As such in order for JAKS to still make 150 M profit as someone had promised, i.e 0.015 USD/kWh, someone (EVN or Government) has to subsidize by this amount:

0.015 USD/kWh (the net profit) :


= Selling price (1) - MFCB cost (3) - JAKS additional cost of coal (4) + subsidy (X)

Subsidy (X) from above works out to be = 0.039 USD/kWh

That is like 400 Million by someone for JAKS alone at 30% stakes.



who the HELL is going to fork out 1.2 BILLION RM annually for FREE?
...................................................................

150M subsidized profit at 600M shares....

That is an EPS 5 cents per qtr at a very distant uncertain future....not sexy at all.


Posted by Icon8888 > Apr 13, 2019 11:03 PM | Report Abuse

I don't worry too much about dividend from Jaks

It won't be equivalent to profit, but will not be zero either

The FCF is definitely less than 150 mil, because 25 years depreciation will now be replaced by 15 years (let's say) principal repayment

You can actually make some assumptions and work out your own figures

At the end of the day, you don't need very high dividend payment. Let's say based on 600 mil shares and price of RM2.00, market cap is RM1.2 bil

Post removed.Why?

cheoky, thanks for your sharings earlier on the difference between MFCB and JAKS...it made me discover a big skeleton hidden - the cost of coal per kWh.

Vietnam needs just one, not 26 coal power plants

https://e.vnexpress.net/news/business/vietnam-needs-just-one-not-26-coal-power-plants-3759808.html


At a conference on energy conservation held in Hanoi on Tuesday, they said that the coal power plants were not needed to sustain the national grid.

Vietnam is currently planning to build 26 additional coal power plants after 2020.

However, the Green Innovation and Development Center (GreenID) said that as many 25 of these were not required.

By removing these 25 plants, which have a targeted annual output of 30 Gigawatts (GW), Vietnam can cut down the ratio of power generated for the national grid by coal from 42.6 to 24.4 percent.

This would help reduce the use of an environmentally unfriendly source, the center said.

Vietnam would also save $7 billion it would have to spend on importing approximately 70 million tons of coal, and reduce its carbon dioxide emissions by 116 million tons, each year, it added.

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

that comes about 100 USD / ton of coal not far from used 115 USD/ton (considering current status, exchange rates)

Icon, i really wanted to buy - because if they can make same profit margin like MFCB hydropower plant does....JAKS is super attractive.

BUT, as attractive is it is...there is equal or if not greater danger seems clearly lurking.

I want to brainstorm / scrutinize to see if Jaks is truly a gem.

Ignore me personally and try to provide counter arguments to dispute the adverse possibilities i may present.



Posted by Icon8888 > Apr 13, 2019 8:29 PM | Report Abuse

probability you have Jaks also ?

https://www.export.gov/article?id=Vietnam-Power-Generation

Encouragement and Challenges

The Government of Vietnam’s policies are to diversify investment sources, encourage foreign investors in power development with BOT, BOO, and PPP. However, Vietnam faces several challenges; electricity prices are still low, existing thermal power plants are unable to buy coal at an economical price, leading to unattractiveness of new power plant projects. The procedures for investors under BOT arrangements are still complicated with insufficient guidelines and equipment prices have increased, leading to increased production costs which reduces the financial attraction of power generation projects.

DK66, Will discuss if i find some interesting factual info being shared here to justify better valuation of Jaks. Thanks for the generous sharings...

Guys, after monday stop promoting on this counter with vague information based on profit figures given by management..seemingly plucked from the air

Question is from where are they getting this 150M..subsidized? The maths using available data shows there is no room for such margins

There are news on standardization of all electric tariff across Vietnam.

In that case, i would rather invest in MFCB if i am certain Jaks will make profit...

isn't then MFCB (hydropower) leveraged by the Jaks (Thermalpower)?

I wished they could pass through 0.047 USD per kWJh (cost of the coal)...

That is the million dollar question now....and was on my last derivation.

Coal contains moisture. When coal burns the moisture in coal evaporates taking away some heat of combustion which is not available for our use.

This is the reason for difference in quality of coal. i.e calorific value.

The reason for 15,000 ton coal per day consumption reported on Vietnam study trip with a 1370 kWh/ton as derived by DK66 is probably due to the quality of coal used as shown by Sslee ranging from 10,500 kJ/kg to 25,000 kJ/kg.

That means the coal cost per kWh is much higher than the high grade coal used at 2460 kWh/ton. The new cost of coal per kWh would then be:

= (2460/1370) x (0.047 USD/kWh) derived from (2) earlier
= 0.084 USD/kWh

this is already coming close to the kWh end selling price to household
..............................................................

Its likely that these low grade coal is cheaper than what had been reported on their Customs Department at VND2.6 million per ton.

But the overall derivations earlier cant be far out.

MFCB uses hydropower as the energy source, but for JAKS it is Coal. Their end product kWh is the same. There is a significant cost difference between the two...one is free the other at 0.047 USD/kWh.

Posted by Travestor > Apr 13, 2019 2:20 PM | Report Abuse

Saying that (2) will wipe out net profit margin of (3) doesn't make sense to me. (3) is an estimation of MFCB's net profit. So, (3) has already net off whatever cost to produce the electricity for MFCB. Or am I missing something. Please enlighten. TQ.

YES thats why CALVIN TAN eyeing malaysia...

Posted by trapped > Apr 13, 2019 10:37 AM | Report Abuse

ECRL bad for S'pore?

Post removed.Why?

https://oxfordbusinessgroup.com/news/malaysia-moves-boost-port-capacity

Increasing connectivity

Improvements to the nation’s ports will serve as bookends for the RM55bn ($12.3bn) East Coat Rail Line (ECRL) – a 620-km electrified rail link between Kuantan Port and Port Klang. At the beginning of November, Malaysia and China signed an engineering, procurement and construction contract for the project.

The ECRL will allow for the rapid trans-shipment of freight across the peninsula, reducing shipping congestion in the Malacca Strait, which hosts up to 80% of China’s maritime trade.

Significantly, the new land-sea link will bypass Singapore and move a major portion of regional freighting activity north. This could boost Malaysia’s profile as a leading logistics hub and open up new routes to markets in North Asia. Work on the ECRL is set to begin later this year and be completed in 2022.

MMCCORP

https://www.mmc.com.my/MMC%20Annual%20Report%202017%20small%20file%20size.pdf

Based on the original plans, 44 tunnels are to be constructed at various locations spanning over 50km. The longest tunnel (which is now likely to be scrapped) is the Genting Tunnel measuring 17.8km (37% of total tunnel length).


The ECRL is of strategic importance to China because the Kuantan Port-ECRL-Port Klang route shortens its trading route and cuts the time it takes to travel to the west of Peninsular Malaysia while eliminating the need to use the Singapore Port.

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

the max reduction from its original tunnel volumes is 37% only, but more importantly it benefits MMC Corp's Port & Logistics division.

you syphon out trades directly from China instead of getting via Singapore Port route

yup RM 1

Post removed.Why?

Hi Sslee,

your figures above considering the overall conversion efficiency of energy are absolutely inline with the basis used of 2460 kWh/ton coal.

Note 1 kWh = 3600 kJ

the big bugging point is as per below which i will present soon:

https://oxfordbusinessgroup.com/news/malaysia-moves-boost-port-capacity

Increasing connectivity

Improvements to the nation’s ports will serve as bookends for the RM55bn ($12.3bn) East Coat Rail Line (ECRL) – a 620-km electrified rail link between Kuantan Port and Port Klang. At the beginning of November, Malaysia and China signed an engineering, procurement and construction contract for the project.

The ECRL will allow for the rapid trans-shipment of freight across the peninsula, reducing shipping congestion in the Malacca Strait, which hosts up to 80% of China’s maritime trade.

Significantly, the new land-sea link will bypass Singapore and move a major portion of regional freighting activity north. This could boost Malaysia’s profile as a leading logistics hub and open up new routes to markets in North Asia. Work on the ECRL is set to begin later this year and be completed in 2022.

Post removed.Why?

Malaysia’s ports to be enhanced with China’s cooperation, says Liow

Published 1 year ago on 04 September 2017

https://www.malaymail.com/news/malaysia/2017/09/04/malaysias-ports-to-be-enhanced-with-chinas-cooperation/1457475