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DK66

Author: DK66   |   Latest post: Wed, 18 Mar 2020, 12:17 AM

 

Jaks Resources - A More Accurate And Reliable Average Valuation

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Jaks Resources -  Average Valuation of Jaks Hai Duong Power Plant (JHDP)


Hypothesis

This article explores the hypothesis that the average value of the valuations derived by the different evaluation methodologies is more accurate and reliable.  

Rationale

Rationale behind the hypothesis came from the following ideas;

  1. An experiment should be carried out a few times and the average results of all the experiments is taken.
  2. More than one independent property valuation should be sought, and the average value is used. 

Why is this exercise important ?

I have used various evaluation methods to value JHDP but each worked on limited and incomplete information. Each method has its own merits and limitations and works under different set of assumptions. Therefore, using the average value of all derivations enhances confidence.

 


I have summarised all the estimated values derived from the various valuation methodologies in the table below. 

Methodology Estimates (RM)      

Value Per share 

Average  
Comparison With Mong Duong II 180m - 300m 4.2 - 6.9 5.5
Comparison With MFCB Don Sahong Hydropower  200m - 267m 4.6 - 6.2 5.4
Discounted Cash Flow Method NPV1.9b - 3.4b 2.9 - 5.2 4.0
Based on Vietnam Government Data 160m - 213m 3.7 - 4.9 4.3
Based on Vinh Tan 1 Operating Data 287m - 383m 6.6 - 8.8 7.7
Average 206m - 290m 4.4 - 6.4 5.4

*Based on 30%-40% Ownership in JHDP. Value Per share are calculated based on 651m shares and 15 times price earnings ratio (PE).

 

Discussions:

  • The various valuation methods evaluate Jaks Hai Duong Power Plant using independent sources of information.
  • Each method was based on unrelated set of data and information.
  • Almost all the most widely used evaluation methods have been employed to derive the potential value of the power plant.
  • There is no correlation ship between the values derived from the various different methods.

 

Observations:

The average values range from RM4.0 to RM7.7  

Overall average valuation is RM5.4

Taking into consideration the use of vastly different methodologies for evaluation, the average values derived fall within rather narrow range. The close proximity of average values provides testimony of accuracy and reliability of the values derived by each of the valuation methods. In other words, the various valuation methods prove the accuracy of each other.

 

Conclusions :

It is always more comfortable to use average value for estimation purposes as you are more likely to be closer to the intrinsic value. When confronted with limited data and information for various evaluation purposes, using overall average value does provide added confidence. 

 

Thank you for reading.

 
 
DK66 
 
P/S: Please visit my blog for the detailed computations of the various valuation methods
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Labels: JAKS

Related Stocks

Chart Stock Name Last Change Volume 
JAKS 0.865 +0.015 (1.76%) 16,265,400 

  19 people like this.
 
Taehyung Simply can't believe ! haha
16/02/2020 12:47 PM
qqq33333333 Vietnam give u US$ meh? Vietnam will give u in Vietnamese dong lah.......US$ is just a convenient conversion..........
16/02/2020 12:51 PM
DK66 is qqq3333333333 qqq3? qqq3 should have read my articles to know the answer
16/02/2020 12:53 PM
qqq33333333 I have to use new name because old name keep getting incorrect password message..............
16/02/2020 1:03 PM
qqq33333333 I just want u to check your workings again.........also, u can forget about the 40% option ...........its not finalised and will be based on re-negotiated price if it happens....
16/02/2020 1:10 PM
qqq33333333 Jaks is close to the previous President who has passed away.........Jaks has no more leverage, and u can say the plant is totally under Chinese control..............Jaks is best described as a passive investor now.........
16/02/2020 1:14 PM
qqq33333333 If the auditors decide Jaks has no influence and can only adopt dividend accounting and not associated company accounting............then its another ball game........
16/02/2020 1:16 PM
DK66 Jaks currently controls 50% of JHDP with 3 out of 5 board seats. Passive investor ??
16/02/2020 1:27 PM
DK66 10% option is based on cost plus carrying costs.
16/02/2020 1:35 PM
DK66 qqq3 I feel shameful answering you knowing that you purposely downgrading Jaks after you have sold. You used to be super optimistic about Jaks.
16/02/2020 1:37 PM
DK66 Jaks will own at least 30% of JV, more than the 20% threshold for equity accounting of JV or associate companies. How can auditors so decide?? qqq3, what is your intention here ??
16/02/2020 1:57 PM
DK66 Talking bad after disposal is not a respectable behaviour
16/02/2020 1:58 PM
qqq33333333 KHDP is Jaks vehicle.....it is not where the plant is.........
16/02/2020 2:15 PM
qqq33333333 sted by DK66 > Feb 16, 2020 1:35 PM | Report Abuse

10% option is based on cost plus carrying costs.
===============


as for the 10%, nothing is finalised......
16/02/2020 2:16 PM
DK66 qqq3, you have proven that you do not know anything about JHDP.....

--------------------
qqq33333333 KHDP is Jaks vehicle.....it is not where the plant is.........
16/02/2020 2:15 PM
16/02/2020 2:40 PM
qqq33333333 they foot the bill, did every thing...........let u control meh? u think Chinese are idiots meh?....some more your contact passed away already.......
16/02/2020 2:43 PM
qq44 If Jaks good why must Razali Merican sold and KYY talked bad?
16/02/2020 2:46 PM
DK66 qqq3, you have already answered such kind of question yourself.
16/02/2020 2:46 PM
DK66 qq44 also qqq3 ???
16/02/2020 2:47 PM
qqq33333333 at one time, the Chinese have to hide behind Jaks...........now, still need to hide behind Jaks meh? Now, the Vietnam officials are no longer afraid to deal directly with the Chinese.............
16/02/2020 2:48 PM
qqq33333333 qq44 is not me/qqq3/stockman
16/02/2020 2:49 PM
qq44 JAKS' future is hopeless - Koon Yew Yin
https://klse.i3investor.com/blogs/koonyewyinblog/2020-02-09-story-h1483734882-JAKS_future_is_hopeless_Koon_Yew_Yin.jsp
16/02/2020 2:51 PM
qqq33333333 I am not predicting share price..........just giving u some thing to consider...........

U already know OTB track record already.........he very one sided one.......
16/02/2020 2:58 PM
DK66 To say I m one sided is not fair, I have to write off the entire property segment.
16/02/2020 2:59 PM
firehawk DK66 qqq3 I feel shameful answering you knowing that you purposely downgrading Jaks after you have sold. You used to be super optimistic about Jaks.
16/02/2020 1:37 PM
DK66 Talking bad after disposal is not a respectable behaviour
16/02/2020 1:58 PM

~ Not only this one, another "sifu" also behaves similarly ... if they still hold, they will promote it like no tomorrow, if u ask something of doubtful, they will deviate from the real topic, and try to hitting u by talk3 talk4 ....the can deceive newbies or not observant type of readers, but for sharp mind readers, their selfish and hypocritical is actually easily exposed ....
16/02/2020 2:59 PM
qqq33333333 fireman............giving u some thing to think is not called selfish or hypocritical........its call fair and balanced............
16/02/2020 3:02 PM
firehawk my remark is about "sifU" ... sorry for misunderstanding .....
16/02/2020 3:04 PM
firehawk can refer to any person with similar characteristics too :D
16/02/2020 3:20 PM
elbrutus DK66 bro...if those SIN KA LANs cum naysayers currently badmouthing Ms JAKS without FACTS N FIGURES to back up ...i hope u SIFUs consider them to be TIN KOSONG n no TIEW them...pardon my french !!! ...replying these shallow people only wasting your gas ...might as well save it to warm your tummy ...literally !
16/02/2020 5:38 PM
elbrutus after having said this ...i sincerely hope that Ms JAKS will stand up able n capable ( n move up to my 1st TP of 2.50 in a few mths time) so that i can show my middle finger to those undesirable buggers ...and say NA !!
16/02/2020 5:44 PM
DK66 Taking 50% discount of the RM 5.40 valuation is RM2.70. There is still more than 80% upside from current price.
16/02/2020 8:37 PM
edkfc Dk66..thankyou for another outstanding write up. Although this is a compilation , it comes with a new insight on law of averages .This certainly boost our confidence level much more . Also , within two year 40% ownership and with that PE of 15 or more s realistic. Great job !
17/02/2020 12:18 AM
DK66 edkfc, thank you for your compliment
17/02/2020 8:26 AM
paperplane so do OTB and KYY still fight over this ah? haha
17/02/2020 12:08 PM
newbie8080 Based on 30% Ownership in JHDP. Value Per share are calculated based on 651m+102m(warrant)=753m shares and 15 times price earnings ratio (PE).
For a more conservative computation.
Just my 2 cents.
17/02/2020 12:14 PM
DK66 Fair enough. Do whatever adjustment to suit your comfort. Please note that 8m warrant has been converted into mother shares by Razali. Total warrants outstanding is 94m.

----------------
newbie8080 Based on 30% Ownership in JHDP. Value Per share are calculated based on 651m+102m(warrant)=753m shares and 15 times price earnings ratio (PE).
For a more conservative computation.
Just my 2 cents.
17/02/2020 12:14 PM
17/02/2020 12:20 PM
newbie8080 On the bright side, this counter had hit as high as RM14 during its heydays in 1995.
This price is more than double @DK66 FV.
17/02/2020 12:40 PM
DK66 wow !
17/02/2020 12:43 PM
mustinvest rEALLY?
17/02/2020 4:26 PM
newbie8080 Try KLSE screener app, set 10 years, drag backwards till 1990s
17/02/2020 5:20 PM
newbie8080 @DK66,

Are all the newly developed power plant in Vietnam between 2010-2019, running at maximum capacity?
If the power plant do not run at max capacity, the tariff payment does not offset the balance of the plants unutilised capacity?
Kindly elaborate as I couldn't recall if you had write of this items previously.
18/02/2020 5:15 PM
DK66 newbie8080,

It is impossible to operate at 100% availability as you have to make time allowance for maintenance and downtime. The 12% IRR and 8 years payback period given by the management was based on 6500 annual utilization hours (74.2% availability). Vinh Tan 1 registered 7238 annual utilization hours in 2019.

The 2 tiered tariff payment is calculated on;
1. capacity payment - capacity made available regardless of utilization.
2. Energy payment - net output generated

Therefore, while capacity payment is pre-determined and paid with or without operation, energy payment is based on output. ie no output no payment.
18/02/2020 7:09 PM
DK66 The article below may help to explain in detail the tariff structure of the PPA

Jaks Resources - The Matrix Behind The Vietnam PPA
https://klse.i3investor.com/blogs/Jaks%20resources/2019-04-15-story202341-Jaks_Resources_The_Matrix_Behind_The_Vietnam_PPA.jsp
18/02/2020 7:11 PM
DK66 newbie8080,

Mong Duong II was not operating at optimal level since operation but have seen great improvement since 2018. However, Vinh Tan 1 which began full operation in Nov 2018 was running at very high availability (83%) since operation.
18/02/2020 7:16 PM
newbie8080 @DK66
Thanks for the clarification.
Maybe for Jak's power plant, we can safely assume it at 75%.
18/02/2020 7:42 PM
Trapper DK66, The amount of time spend writing and researching all the articles you have written is just unbelievable, you are such a generous and unselfish guy that share with everyone in I3 investor.
I really appreciate what you have done. All I can say is a big Thank you
18/02/2020 8:11 PM
OTB DK66 is the best FA sifu in Jaks forum.
A very honest and knowledgeable gentleman who is so generous to share his knowledge here.
I buy Jaks because of his write up.
Thank you.
18/02/2020 8:22 PM
Trapper Buying Jaks is a calculated risk.
18/02/2020 8:25 PM
DK66 newbie8080, you are welcome
18/02/2020 8:30 PM
DK66 Trapper and OTB, Thank you for your kind words. Really appreciate it.

----------------
Trapper DK66, The amount of time spend writing and researching all the articles you have written is just unbelievable, you are such a generous and unselfish guy that share with everyone in I3 investor.
I really appreciate what you have done. All I can say is a big Thank you
18/02/2020 8:11 PM

OTB DK66 is the best FA sifu in Jaks forum.
A very honest and knowledgeable gentleman who is so generous to share his knowledge here.
I buy Jaks because of his write up.
Thank you.
18/02/2020 8:22 PM
18/02/2020 8:31 PM


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