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DK66

Author: DK66   |   Latest post: Wed, 2 Oct 2019, 10:47 PM

 

Jaks Resources - 1200MW power to fire up Soon !

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The Development of Jaks Hai Duong Coal Power Plant

The construction of the Jaks' Hai Duong 1200MW subcritical thermal power plant costing RM8 billions began in early 2017. The coal power plant consists of 2 independent units of 600MW turbine engines, each powered by 2 units of 300MW steam boilers.

Located in Northern Vietnam, the power plant is being constructed by Jaks’ partner, CPECC, who has just fully commissioned the 1240MW Vinh Tan 1 supercritical coal power plant in November 2018 in Vietnam.

 

Jaks Hai Duong coal power plant in Vietnam. Picture taken on 16th September 2019

 

Deadline

Hai Duong power plant is given until 1st December 2020 to commission its unit 1, and unit 2 six months later. Both Mong Duong II and Vinh Tan 1 power plants in Vietnam were commissioned about 6 months ahead of schedule.

 

Current Stage of Construction

Unit 1 (the right half of the picture above) of the power plant is currently preparing for advance testing before going live.

Boilers 1, 2 and 3 has successfully carried out hydro tests and turbine 1 has completed installation of its turbine rotor. This marks advance development stage of the power plant unit. Unit 1 is scheduled to carry out steam blow test before end of the year.

Based on the construction schedule of Vinh Tan1, synchronization with the EVN power grid is expected to be carried out 2 months after the steam blow. The 168-hour reliability test will be carried out within the following 2 months after which it will commence commercial operation.

Therefore, barring unforeseen circumstances Unit 1 is expected to fire up in March/April 2020. Unit 2 will start operation 3-4 months later.

 

Earnings ?

Again, the biggest question of interest is "How much can Jaks make from its power generation business?"

Without the power purchase agreement (PPA), there is no absolute answer. However, I have used several methods to derive power earnings to Jaks between RM180m to RM300m. You may visit my two previous articles listed below for details.

  1. Understanding Jaks Hai Duong thermal power plant in Vietnam
  2. Jaks Resources – Peer Comparison With Mong Duong II

 

Jaks will be reclassified as a power generation company when majority of its earnings is derived from its power business. 

 

Finally, I strongly believe earnings from Hai Duong power plant will be a game changer for Jaks. It will deliver multi-bagger returns to confident investors when it fires up its power plant !

 

Invest at your own risk. Happy investing.

 

DK66

 

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Labels: JAKS

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Chart Stock Name Last Change Volume 
JAKS 0.945 +0.01 (1.07%) 21,500,500 

  4 people like this.
 
DK66 My study was based on the construction schedule of Vinh Tan 1 and Mong Duong II as well as my knowledge of the industry. As the construction schedules may defer for different projects, the timeline can only serve as an estimate, not conclusive. Of course, could either be earlier or later.
21/09/2019 11:51 PM
Nikmon It is certain that it will completed at least 6 months earlier.
22/09/2019 12:54 AM
deMusangking dun worri! sslee n stockraider praying hard in the temple!!!!!

haha
22/09/2019 8:16 AM
Sslee Hahahaha
deMusangking, I pray for those who purchase a unit at Pacific Star will have their VP soon.
Comment in lowyat forum on pacific star.
oliver77 @ Aug 19 2019, 07:58 PM
According to SPA it was supposed to be completed by Dec 2017. So will be 2 years delayed in a few months
22/09/2019 8:40 AM
DK66 CPECC is a very experienced power developer in China. In Vietnam, after completion of Vinh Tan 1 power plant in Nov 2018, it has 2 on going power plant projects. One being Hai Duong power plant and the other is Duyen Hai 4. Duyen Hai power plant is 40% owned by Janakuasa, another Malaysian company under MMC group. Duyen Hai just begun construction not long ago. All these 3 power plants are around 1200MW in capacity.
22/09/2019 9:10 AM
cheoky Buy tadmax better lo.all division making money n got pp too. Jaks kitchen always got cockroaches
22/09/2019 9:18 AM
DK66 The current regime of high US$ exchange rate to Chinese Yuan as well as lower interest rate is benefiting Jaks' power project. Power plant equipment and construction materials are denominated in Yuan. As FOMC is lowering interest rate, borrowings denominated in US$ benefit from lower interest expense.
22/09/2019 10:24 AM
Investar2862 JAKS in good position for re rating in 2020
22/09/2019 11:49 AM
hng33 Over the year, Jaks have staggering provide LAD provision every quarter in accord to time delay in handover unit to purchaser till completion.

Therefore, once unit is confirm handover after completion, the earlier provision LAD in Jaks balance sheet will use to fund payout to purchaser as compensation for delay.

Thus, once the pacific property completed and handover within these year, it will officially ended Jaks to have to provide anymore LAD in its profit/loss statement, eliminate these loss making division totally.

Jaks also on track to break even its concept mall due to surge occupancy rate recently from 55% to over 80%. All in all, in next few quarter result will show great reduction loss making due to LAD and property investment in concept mall.

On the other hand, power plant construction profit will expedite to record balance of work till completion and then later commencement of new stream of steady income worth EPS 15-20sen pa from power profit next year

In time of China-US trade war, Vietnam is key beneficial country. Many manufacture in global supply chain have opt to shifted to Vietnam. Adequate Power supply is in great need, full capacity fire up to meet demand. Therefore, Jaks new power plant stand to benefit full capacity payment once operating in full capacity early next year.

Jaks director know the best of its own company, a game changer in coming, have keep accumulating low price Jaks in open market without interfering much market price now, a forward step before value emerging later once all loss making in LAD behind, heading to new profit making power plant.

Please take note the company holding the BOT is JAKS Hai Duong Power Company, which is in a 50:50 joint venture between Jaks and China Power Engineering Consulting Group Co Ltd (CPECC).

In turn of future profit recognition from power plant, Jaks have equal stake in the joint venture. Although the effective stake will dilute due to CPECC holding convertible preferential share in JV.

The revenue account in JV is very flexible. Take for example, ecoworld international have 70% stake in London project, but it opt not to recognize any revenue from JV. Sapura OMV have 50% stake in JV, also opt not to recognize revenue in JV. Another example is Malton dispose 49% in pavilion mall, still holding 51% stake and yet opt not to recognize in JV future revenue. Earlier example also like Puncak holding 70% stake in syabas, but opt no revenue in JV.

From above example, one can understand it is flexibility in accounting treatment once the company is classified as joint venture company. Either the majority stake, equally stake or minority stake in joint venture company can have option to consolidate or no in revenue recognition. However, the net profit is still based on effective stake in JV
22/09/2019 11:53 AM
PotentialGhost They cannot solve the mall problem .
22/09/2019 11:59 AM
DK66 Practice of proportionate consolidation of Joint venture accounts is rare in malaysia.
22/09/2019 1:08 PM
DK66 Jaks is equity accounting its joint venture investments. Hence, revenue of joint venture will not be taken up.
22/09/2019 1:09 PM
DK66 Only sharing of profit/loss of joint venture will be recognised in Jaks' group account.
22/09/2019 1:09 PM
Nikmon At least 2 office tower are completed, mall is wrapping up..stop bleeding a bit which is good news....
22/09/2019 11:21 PM
DK66 https://klse.i3investor.com/blogs/Jaks%20resources/226058.jsp
22/09/2019 11:29 PM
newbie8080 Any idea if earnings is staggered from day1 of power plant being fired up?
Since the power plant is the sole revenue generator once the Malaysian property are completed by 2019, what will the company be earning in the Q1 2020?
23/09/2019 7:27 PM
DK66 Jaks earnings in Q1 2020 will still be dominated by profit from EPC contract
23/09/2019 8:36 PM
deMusangking Patience is the WORD!!!!!
23/09/2019 8:41 PM
Nikmon Only 3 months, very fast
24/09/2019 10:25 PM


 

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