Value From Research

Author: i3Value   |   Latest post: Fri, 21 Feb 2020, 6:15 PM


Jaks Vietnam EPC Contract Revenue

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Note: This is a revised version. Upon DK66's comment, I revised calculation using project value of US$454.0 million.


Below is Jaks revenue from the Vietnam EPC project. Numbers are taken from quartertly results.

Balance Vietnam revenue to book in from 4Q 2019 to 4 2020 is US$120.0 million (RM503.0 million at today's rate). How much revenue for each quarter? From 2019 result we can see the percentage of completion falling as the project is near to finish.

If 4Q 2019 can recognise 8%, revenue is RM152.4 million. If 5%, revenue is RM95.3 million.

What is the project profit margin? Numbers below are taken from Jaks quarterly results.

If apply average PBT margin, 8% percentage of completion will contribute PBT of RM36.3 million. 5% percentage of completion will be PBT RM22.7 million.

The above number may provide some guide to fellow Jaks investors.







Extras. Below discussion is not reliable. Just for curious sake.

What is expected profit for Q4 2019? So many factors to take into consideration. Impossible to predict.

For curious sake, if assume all other business and expenses same as Q3 2019, and replace with above PBT.

Q3 2019 Vietnam revenue was RM168.5 million, PBT on average margin was maybe RM40.1 million. Q3 2019 net profit was RM25.0 million.


If Q4 2019 is 8% percentage of completion, net profit by this unreliable method is RM25.0 million - RM40.1 million + RM36.3 million = RM21.2 million

If Q4 2019 is 5% percentage of completion, net profit by this unreliable method is RM25.0 million - RM40.1 million + RM22.7 million = RM7.6 million

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Labels: JAKS

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JAKS 0.885 +0.095 (12.03%) 70,248,500 

  5 people like this.
DK66 Thanks for sharing.

My opinion is you should not use the 82% as Jaks' total progress billings todate. The Edge's figure refers to the overall completion of the entire project.

Jaks' EPC2 is US$454.5m x 4.1 = RM1,863m instead of RM1,678.8m.

Therefore, I believe Jaks' progress billings is 73.8% todate.
21/02/2020 6:37 PM
DK66 I meant 73.8% till Sept 2019
21/02/2020 6:40 PM
i3Value DK,

From The Edge article. "Its Vietnam EPC contract is progressing well — it’s about 82% completed from 70% a quarter ago."

Why so much difference?
21/02/2020 6:42 PM
DK66 JHDP awarded 2 EPC contracts to CPECC and Jaks. EPC1 worth US$1,060.5m was awarded to CPECC, and EPC2 worth US$454.5m was awarded to Jaks. The entire EPC2 jobs was subcontracted to CEEC, a subsidiary of CPECC, and Jaks got a clean cut. However, Jaks still has to do the progress billings.

As the Jobs nature of EPC1 and EPC2 are completely different, hence, their level of completion will not be the same. For external reporting purposes, I believe only the overall completion is taken.

In any case, the ringgit equivalent of US$454.5 cannot be only RM1,678.8m as the implied exchange rate is only 3.69.
21/02/2020 6:51 PM
i3Value DK, I agree with you. US$454 million correct project value.

I amended my calculation
21/02/2020 7:43 PM
DK66 Just my observation, do you think using 9 months PBT for projection will be a more reliable method. Just in case there are abnormality in Q3 results.
21/02/2020 7:53 PM
firehawk Thanks for sharing :)
21/02/2020 10:02 PM
i3Value DK, i think 3 months or 9 months, accuracy is very low. That why i say the ‘projection’ is not reliable. For curious only
21/02/2020 10:58 PM
probability may be should recognize all revenue by 2Q 2020, since unit 1 will enter grid by Mar 20' and Unit 2 would be just waiting green light from EVN to place to the grid by then...

cant see much activity other than labor (commissioning) after June 2020
22/02/2020 12:06 PM
dailyklse2010 Thanks for sharing. Guessing only, progress billing maybe more than that 8%.
22/02/2020 12:47 PM
i3Value dailyklse2010, you think can more 8%? Dropping from 13.8% to 12% to 8.9% in last 3 quarter. Usually project going to finish, the percentage of completion is get lesser and lesser. But if more than 8% i also happy
22/02/2020 8:30 PM
i3Value Probability, unlikely Q2 can recognise 100%. Unit 2 can so fast?
22/02/2020 8:34 PM
probability Nhà máy điện tỷ đô trước giờ G

January 2, 2020


Dự kiến trong khoảng từ ngày 7 - 15.3.2020, tổ máy số 1 sẽ hòa lưới điện lần đầu; từ ngày 1-15.4.2020 sẽ thử nghiệm độ tin cậy và trong khoảng thời gian từ ngày 15.5 - 15.6.2020 sẽ vận hành thương mại. Khi đó dòng điện của Nhà máy Nhiệt điện BOT Hải Dương sẽ chính thức hòa vào lưới điện quốc gia.

Tổ máy số 2 sẽ vận hành sau tổ máy số 1 khoảng 6 tháng"


google translate of above:

Expected in the period from 7-15.3.2020, unit 1 will join the grid for the first time; from 1-15.4.2020 will test reliability and in the period from May 15 - 15.6.2020 will operate commercially. At that time, the current of the Hai Duong BOT Thermal Power Plant will officially enter the national grid.

Unit 2 will be operating after unit 1 about 6 months "


If 6 months above means from date of Operation of unit 1, then it should be 7.03.2020 (unit 1 operation) + 6 months = 7.09.2020 (Unit 2 Operation)

As such, in worst scenario Unit 2 has to be ready by end of August for Operation. Physically in terms of construction it should be considered ready 2 months ahead ~ June 2020, just like how Unit 1 was early Jan 2020 before its operation in Mar 2020.
22/02/2020 9:23 PM
probability Taking us around the factory, Mr. Do Manh Hung, Head of Government Relations and Business Development Department of Jaks Hai Duong Power Company, the investor, excitedly said: "Come Now, the project has completed 90% of the total workload..


The above statement was made on 2nd Jan 2020
22/02/2020 9:28 PM
i3Value Vietnam revenue recognised in Q4 2019 was RM166.9 million. Or US$40.8 million at 4.0925 forex.

Percentage of completion = 9.0%
27/02/2020 7:17 PM
probability next qtr would be even more beautiful, % completion will become even more aggressive
27/02/2020 10:26 PM

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