Koon Yew Yin's Blog

Author: Koon Yew Yin   |   Latest post: Fri, 16 Mar 2018, 08:53 AM


JAKS' 1,200 MW Power Plant Construction Progress Report - Koon Yew Yin

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This photo shows JAKS’ power plant chimney which is 165 m or 550 feet high, equivalent to a 55-storey high building. 64 percent of the chimney is completed and the foundation completed. The super structure and steam boilers are being manufactured in China.    

The above chart shows the share price of JAKS which has gone up from Rm 1.00 to close at Rm 1.72 last Friday, an increase of 72 % within one year.

The stock market is like a voting machine and the share price is the result of the voting. An increase of 72% within one year shows that there are many intelligent investors who can foresee the profit growth prospect even the company’s annual accounts will only be announced before the end of February.

They can also foresee that the company will be paid Rm 400 million  during the construction of the power plant which is scheduled to be completed in about 2.5 years. I was told that the Chinese JV partners can complete the power plant ahead of schedule.

All Intelligent investors can imagine that JAKS with such a small market capitalisation can eventually own 40% of the power plant that costs about RM 7.76 billion. It does not require to borrow money from the banks to put into the JV as capital. It does not even need to lay a brick to build the power plant.

Moreover, it sounds so unbelievable that JAKS is being paid Rm 400 million during the construction period. 

I am sure the 3 National Banks of China must have examined the power purchase agreement (PPA) to make sure it is water tight before they are prepared to finance the project. They must make sure the JV must be able to make profit otherwise they cannot repay their loan. It is like the consortium of 3 Banks is guaranteeing all the shareholder of JAKS that they will make profit every year for 25 years.  

I strongly believe the share price of JAKS will continue to improve every year for many years to come. It will perform better than Latitude, VS Industry and Lii Hen, each of which has gone up a few hundred percent within a few years. I am proud to say that I was the second largest shareholder of each of these companies at one time.

I am obliged to declare that JAKS is my largest and Hengyuan is my second largest investment. I am not asking you to buy them but if you decide to buy, you are buying at your own risk. 

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Labels: JAKS

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