Posted by DK66 > 2020-05-16 19:58 | Report Abuse

elbrutus, thanks for your "Like"

Posted by DK66 > 2020-05-16 20:02 | Report Abuse

I quoted Mr Sslee's article on the equity IRR free cash flow.

Posted by DK66 > 2020-05-16 20:02 | Report Abuse

But I m still waiting for his confirmation on the net profit calculation using equity IRR.

Posted by DK66 > 2020-05-16 20:04 | Report Abuse

probability, is this convincing for you ?

Posted by probability > 2020-05-16 20:07 | Report Abuse

@DK66, sorry i have not been following your discussion recently in i3 completely..

The above earnings derivation with project IRR seems in line with what i had estimated excluding interest like i had expressed earlier. So, have you changed your opinion on the Interest cost inclusion for Project IRR?

Posted by DK66 > 2020-05-16 20:11 | Report Abuse

Probability, I must have misunderstood you completely. When I said the FCF must have included the interest cost. This is what i meant here. Is this what you meant also when you said interest cost must be excluded ??

---------------
probability @DK66, sorry i have not been following your discussion recently in i3 completely..

The above earnings derivation with project IRR seems in line with what i had estimated excluding interest like i had expressed earlier. So, have you changed your opinion on the Interest cost inclusion for Project IRR?

Posted by probability > 2020-05-16 20:20 | Report Abuse

e.g on 1st year, you had used the below figures:

1 652 301 353 1,306

FCFF = 1306

= Profit (652) + Depreciation(301) + Interest Cost (353)

so it means you had used FCFF for Project IRR exactly like had mentioned.

I thought you were saying to use FCF-E (meaning excluding interest cost) of 1271 to derive the reported project IRR of 12%.

.........

You can see that Icon8888 did not use the above FCFF method when he derived the profit working back from IRR of 12%. He used FCF-E and thus inflating the profit for a given IRR.

That was the reason the debate between us earlier, where you had supported Icon method was correct.

Just trying to clarify

Posted by DK66 > 2020-05-16 20:20 | Report Abuse

Oh dear, so you and I actual agreed on the same method of calculation ?? Let me take another look at icon8888 article.

Posted by Kohcl8 > 2020-05-16 20:21 | Report Abuse

This return is assuming that all stars are aligned. Need to know if there are cost overrun and commercial operations date.

Posted by probability > 2020-05-16 20:22 | Report Abuse

Icon8888 sifu, where have you gone missing from i3?

Posted by DK66 > 2020-05-16 20:25 | Report Abuse

Probability, Icon8888 is using EBITDA as cash flow in its IRR calculation. This effectively included the interest cost in his IRR calculation. This is in line with my calculation here.

Posted by probability > 2020-05-16 20:26 | Report Abuse

let me check again...

Posted by probability > 2020-05-16 20:34 | Report Abuse

DK, if you see the 4th year FCF (year 2025), he derived it from EBITDA of 1681 to be 1044. He had deducted the Interest cost of 206 to derive the FCF.

He then used this FCF of 1044 on the 4th year of his NPV derivation under section 5.

If he had used FCFF like you did above the FCF on 4th year will be 1044+206 = 1250

If he used 1250, the IRR will be much higher than 12%

This is not the same like you did above.

Posted by DK66 > 2020-05-16 20:48 | Report Abuse

Probability, I agree with you. Icon8888 should be using the Ebitda as FCF. Instead, he used a net of interest figure in his IRR calculation. I m sorry, I did not read his article in detail. I thought he was using Ebitda.

You should have pointed it out to me the way you did just now and we wouldn't be having all the arguments. In any case, the fault is mine. I apologise to you.

Posted by probability > 2020-05-16 20:50 |

Post removed.Why?

Posted by DK66 > 2020-05-16 20:55 | Report Abuse

Probability, you are welcome. Do you think this article established a strong link between the PPA payments of JHDP and Vinh Tan 1 ?

Posted by probability > 2020-05-16 21:12 | Report Abuse

DK, my original estimation on 1RR for Vinh Tan 1 based on reported earnings is about 15%.

so if you exclude 12% from that , its about 3% for energy payment.

Even if you discount 20% due to efficiency on 3%, its just abut 0.5% reduction in IRR.

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

To me the Dividend from Mong Duong 2 which comes fairly close to the earnings of Vinh Tan 1, gives quite a bit of confidence that JHDP will perform similarly.

so the earnings estimation is no longer a concern for me at all
...............................................................

only remaining concern is if Jaks could raise their stake to 40% without seeking existing investor to take out from their pocket

Posted by DK66 > 2020-05-16 21:17 | Report Abuse

Probability, thanks for your thoughts.

Whether or not Jaks would need to raise fund for the extra 10% depends on the timing. It has 3 years after COD to do it.

Posted by DK66 > 2020-05-16 21:19 | Report Abuse

In any case, the extra 10% will be EPS accretive as it is acquired at about 4x PE.

Posted by DK66 > 2020-05-16 21:21 | Report Abuse

This article proves that all Vietnam IPP BOT have roughly the same PPA payments from EVN except that they must keep the power plants in good running order in order to achieve full capacity payments.

Posted by DK66 > 2020-05-16 21:23 | Report Abuse

Defective power plants will cause a lot more down time and thus less capacity and energy payment.

Posted by edkfc > 2020-05-16 21:40 | Report Abuse

In a year to two, when the power plant is in full swing, share px would be following suit. At that time, dont be surprised , shareholders n institution may be pleading for the company for RI ! Moving to 40% is risk-free to Jaks and with an upside of 33% to earning !In any case with FCF of at least rm300M annually, Jaks could easily take its rightful share of 40%

Posted by johnmasino > 2020-05-16 22:45 | Report Abuse

Thanks DK66. I'm not an accountant but I have a lot of common sense and can see why peer comparison is very reliable. Kudos to you!

Posted by DK66 > 2020-05-16 22:47 | Report Abuse

johnmasino, you are welcome and thank you.

Posted by quanhuey1 > 2020-05-16 22:48 | Report Abuse

Ok

Posted by elbrutus > 2020-05-16 22:51 | Report Abuse

DK66 bro ...is that guy 3qeight3 for real eh ???

Posted by popo92 > 2020-05-16 23:16 | Report Abuse

theory is in line with Vinh Tan 1 power plant, their deputy director also said they will be able to pay off all debts and start generating profits 18 years after the plant starts commercial operation.

Posted by DK66 > 2020-05-16 23:22 | Report Abuse

elbrutus and johnmasino, There are people who are in constant denial.

Both projects secured USD1.4 billion in borrowings. The power plants are non-movable so as good as no securities in the eyes of the chinese bankers. If the power plants do not have similar earnings capability, will the bankers lend the same amount of loan ? That is common sense.

Posted by elbrutus > 2020-05-16 23:27 | Report Abuse

but they beg to differ cum no paperwork to back up their claim...funny world !!! ...why cant people learn to respect other people presentation without smearing their integrity !!! ...shameful lot

Posted by DK66 > 2020-05-16 23:36 | Report Abuse

elbrutus, you are right, the best way to refute or proof of different views is to present it systematically in an article so that it will remain on the headline of Jaks forum forever. Everyone will see it. There is no need to repeat the same arguments over and over again.

When you reject someone's TP, shouldn't you provide your own TP to be credible?

Posted by elbrutus > 2020-05-16 23:54 | Report Abuse

normally i would have use my ONE LINER ...NO GO SCHOOL ...but do not wish to step on them toes !!!...no worth d effort !!!

Posted by DK66 > 2020-05-22 11:09 | Report Abuse

I have revised my NOTE 1 to reflect a more realistic scenario where the net profit should be expected to increase when interest cost decreases over time.