Important time-tested proven market rules or tips
Jaks - We buy Jaks because of its Hai Duong power plant in Vietnam
OTB
Publish date: Tue, 31 Dec 2019, 11:25 PM
Dear valued readers,
I believe all readers should know that Jaks has a power plant in Vietnam named Hai Duong, it is a joint venture with Chinese firm CPECC. Jaks has 30% stake and CPECC has 70% stake in this power plant. Jaks has an option to own an additional 10% within 3 years of operations.
The power plant
- The power plant of Jaks is called Hai Duong power plant. It is located in Vietnam.
- Jaks owns 30% of Hai Duong power plant with option to add 10%.
- The Power plant of MFCB is called Don Sahong Hydro power plant. It is located in Laos.
- MFCB owns 80% of Don Sahong Hydro power plant.
The price trend of the power plant
- I had made a detailed study on the trend (technical chart) of power plants in general.
- The stock price will go up slow and steady 6 months before the power plant is selling electricity.
- The stock price of MFCB started to move up north since 2/7/2019, the date to sell electricity is 1/1/2020.
- The stock price of Jaks started to move up north since 8/10/2019, the date to sell electricity is 1/4/2020.
- Enclosed are two technical charts of MFCB and Jaks for your perusal.
The reasons why the investors buy power plant 6 months ahead
- Power generation business is unlike other businesses which depends on supply and demand. There is a big variations on product pricing and its cost.
- Power generation business is a contractual business with pricing and others stated upfront in the contract agreements.
- The risks are project delays and unexpected project costs overrun.
- Big Investors will not give a high PER during the early phases due to the aforesaid risks.
- Once the project runs smoothly and near completion, a higher PER will be accorded.
- I am not surprised a PER of 15 will be accorded to both Jaks and MFCB once it started its earning to sell electricity respectively.
- A steady future income or revenue and cash flow for both Jaks and MFCB with good contractual margins.
Jaks
Please read the below link.
-
https://www.malaysiastock.biz/
Corporate-Infomation.aspx? securityCode=4723 - Q1 2019, Q2 2019 and Q3 2019 results were good.
- I believe the EPS for 2019 is projected to be 0.18.
My stock selection criteria
Below is my stock selection criteria, I want all of you to remember this keyword "UBS GMF".
Jaks passed 6/6 of my stock selection criteria.
TA comes first
U - Up trending stock - Cross 200-day SMA - Passed
B - Breakout chart - Break above 0.78 - Passed
S - Sector to focus - Construction or Energy - Passed (both)
FA comes second
G - Growth > 17% per year (2020) - Passed
M - Margin of safety > 43% - Passed
F - Forecast current year EPS must be better than the previous year EPS - Passed
Please note that I consider TA ahead of FA in my stock recommendation.
TA reading
- The share price of Jaks is breaking new high.
- The share price had breakout from Golden Cross at 0.78 which is very bullish.
- The price is above 20-day EMA, 70-day SMA and 200-day SMA.
- MACD signal is above zero level.
- Stochastic and Force Index showed buy signal which are bullish.
- Weekly MACD also showed a buy signal, this technical chart will be bullish for a long time.
3 important features appeared in the technical chart
I want the following features to appear in the technical chart so that the probability to win on this stock is very high.
- The Golden Cross of 20-day EMA to cut above 70-day SMA had been formed on 8/10/2019.
- The share price of Jaks to be higher than 70-day SMA to create a 3-month high.
- The Blue and the Red lines of MACD must stay above zero level to show a stronger momentum.
FA report
- I assume all Malaysian operations to be zero value. Evolve Concept Mall is valued at RM300 million, I believe this amount of money is more than enough to cover all losses in Malaysian operations.
- FY 2019, I projected the profit after tax of 113 million. First nine months the total net profit is 91 million, I assume net profit of 22 million in Q4 2019.
- FY 2020, I projected the profit after tax of 150 million. 50 million is the construction profit from power plant and 100 million on the sale of electricity in 2020.
- FY 2021, I projected the profit after tax of 250 million from the sale of electricity only.
| Year | Price | PAT | EPS | PER | Target price | Gain % |
| 2019 | 1.27 | 113 | 0.18 | 7.23 | 1.80 | 41.73% |
| 2020 | 1.27 | 150 | 0.23 | 5.44 | 2.33 | 83.69% |
| 2021 | 1.27 | 250 | 0.39 | 3.27 | 3.89 | 206.14% |
Compare 3 power plants (using coal-fired power) in Vietnam
Mong Duong 2, Hai Duong , and Vinh Tan 1 are all foreign owned power plants (using coal-fired power) in Vietnam operating under 25 years BOT contracts with capacity around 1,200 MW. All their power purchase agreements were signed around 2012.
Therefore, terms and conditions of these BOT contracts should exhibit extreme high similarity, if not identical.
The Mong Duong-2 power plant
The Mong Duong-2 power plant was constructed on a 297ha site in the Mong Duong Power Centre, approximately 200km east of Hanoi, and is located alongside the Mong Duong 1 project.
The site was selected for its proximity to coal mines, availability of transportation infrastructure and cooling water, as well as easy connection to the national grid. Both plants are expected to share common facilities, including the fuel-oil and limestone jetties, as well as cooling water inlet and outlet channels.
Mong Duong-2 is equipped with two 600MW power boilers, the first boilers to be produced domestically in Vietnam, and will use pulverised coal (PC) technology, which will involve the pulverisation of coal at a highly fine degree to spray into the furnace. A flue-gas desulfuriser (FGD) will be installed for this operation.
Mong Duong-2 power plant achieved full commercial operation in 2016 (COD).
Hai Duong power plant of Jaks
The Hai Duong build-operate-transfer (BOT) power plant, licensed in 2011, is the Malaysian company’s first foray into Vietnam’s power generation secctor. It started construction in March 2016 through a joint-venture between Jaks Resources and China Power Engineering Consulting Group. Golden Keen Holdings, a wholly owned subsidiary of Jaks Resources also secured a $454.5 million EPC contract for Hai Duong BOT power plant. Future earnings look promising as the company has a 25-year power purchase agreement (PPA) for the power plant. The project is expected to come online in 2020, and it is expected to enjoy recurring concession-type earnings with state-run Electricity of Vietnam from the generation and sale of power under the signed PPA.
Hai Duong power plant will start to produce and sell electricity in April/May 2020.
Vinh Tan 1 Thermal Power Plant
Located in Vietnam's southern province of Binh Thuan.
The coal-fired power plant includes two 620-MW super-critical generating units owned by a consortium led by China Southern Power Grid, and constructed by CEEC. CEEC is a subsidiary of CPECC who is Jaks' partner in JHDP.
The plant, with a total investment of about US$1.76 billion, is the biggest project invested by Chinese companies in Vietnam, as well as the first BOT (Build-Operate-Transfer) investment made by China in the country. Both its design and construction adopt Chinese standards.
Vinh Tan achieved full commercial operation on 27th November 2018 (COD).
How to calculate projected earning of Hai Duong power plant of Jaks
Since Hai Duong power plant and Vinh Tan 1 are built by the same company of China i.e CPECC, it is more accurate to use the earning of Vinh Tan 1 to project the future projected earnings of Hai Duong power plant. These 2 power plants are using the same technology from CPECC. However, I cannot get any information from the profit of Vinh Tan 1 power plant.
How to calculate projected earning of Hai Duong power plant of Jaks (second method)
I am using the earnings of Mong Duong 2 to project the future projected earnings of Hai Duong power plant since these 2 power plants are using coal-fired power to produce electricity.
Below is the current earning of the Mong Duong 2 power plant for the first 9 months of 2019.
AES owns 51% stake, total profit of US$ 74M for nine months (YTD2019: Q1+Q2+Q3), at 100% stake annualized = RM 812M.
It means Hai Duong power plant of Jaks equal to 30% of RM 812M = RM 812M*30% = RM 243M.
Please note that Q3 2019 result of Mong Duong 2 is very impressive, based on Q3 2019 result (Using coal, apple to apple comparison), if annualized the Pre-tax income at 100% stake will be:
US$ 45/QTR x (100%/51%) x (RM4.2/1.0 US$) x (4 QTR/YR) = RM 1482 Million.
JAKS at 30% stakes, the earning is RM 444 Million (being tax free for the first few years)
Please note that Mong Duong 2 plant costs US$ 2.1 Billion and thus having much higher depreciation rate than the US$ 1.87 Billion of Hai Duong. That’s about RM 40 Million earnings difference per annum. The earning of Hai Duong power plant will be more than Mong Duong 2.
My recommendation
- The profit of RM 250 million in 2021 is very conservative (please refer to 2 methods of calculation), I will take the lowest number I projected.
- Please note that there is no power plant in the world is losing money because the tariff of electricity sale is fixed at a good price to allow investors to make a good profit margin.
- Among 60 cities and provinces of Vietnam having received FDI between January and November, Hanoi has attracted the largest portion of capital commitments with over US$6.82 billion, accounting for 21.5% of total commitments in the period.
- Hanoi will face shortage of electricity supply due to high FDI flows in the next few years. Electricity will sell like a hot cake.
- I buy Jaks is because of Hai Duong power plant. I can see the future earnings growth of this power plant especially after 2021.
- I like to compare the power plant of Jaks to IPP of YTLPower, the share price of YTLPower increased 790% after IPP started operation.
- Where can you find this type of investment ? Invest RM 560M in this power plant, the payback is about 2 or slightly > 2 years. Then 23 years of guaranteed profit. The famous Chinese saying, "There is no such thing as so many big frogs jumping in the street".
- The general stock price trend of a power plant in the world, investors should buy the stock 6 months ahead of the power plant to produce and sell electricity. Hai Duong power plant will produce and sell electricity in April/May 2020, I believe it is the correct and right timing to buy Jaks now. The present price correction of Jaks served as the opportunity to buy Jaks at an attractive price. No one can buy a stock at the lowest price.
- You must buy and hold Jaks in your 2020 and 2021 portfolio to win big.
Final decision to buy is always yours.
I take this opportunity to wish all readers in I3 "A Happy And Prosperous New Year 2020".
Thank you.
OTB
寧可天下人負我, 休教我負天下人
Disclaimer :
Please be informed that the aforesaid stocks are solely for the purpose of education only ; it is neither a trading advice nor an invitation to trade. For trading advice, please speak to your remisier or dealer representative.
Final decision to buy is always yours.
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More articles on Important time-tested proven market rules or tips
Jaks - Annual net profit of Hai Duong power plant in 2021 is RM 248 million
Created by OTB | Mar 04, 2020
Discussions
12 people like this. Showing 50 of 51 comments
Posted by JensenChin > Jan 1, 2020 12:00 AM | Report Abuse
OTB, why not buy Serbadk? Meet your criteria and proven track record of profit
---------------------
Answer :
I am always look at PER < 10.
I will look at it since you recommend it to me.
Thank you.
2020-01-01 00:05
When share stagnant at same level so long...here come the article. Pls keep it for ur paid member n no need to be so generous to share it here.
2020-01-01 00:09
The fact that Koon compared to Mudajaya in India 1000s miles away, instead of Hai Duong close neighbours in the same country such as Mong Duong 2 and Vin Tanh1...clearly shows an ulterior motive.
It shows we are all a child deep inside..controlled by jealousy, pride n arrogance etc..
2020-01-01 08:50
Next, i hope they will announce in local media after the successful scheduled steam blow test on 4th Jan
This is a major milestone, its as good as ready for generating power
2020-01-01 09:05
Yes, i do totally agree with Probability.
Hope Jaks's management will do it .
------------------------------------------------
Posted by probability > Jan 1, 2020 9:05 AM | Report Abuse
Next, i hope they will announce in local media after the successful scheduled steam blow test on 4th Jan
This is a major milestone, its as good as ready for generating power
2020-01-01 09:21
while i believe in long term Jaks will be great...and that should be proven by quarter reports in 2020 onwards......what i dont understand is why OTB need to keep proving himself right eagerly non stop.......as a subscriber for years i have never received so many articles and updates from him regarding a counter, except for JAKS.....Mr OTB, let it move up slowly if ur very confident of it.......im pretty sure this is your personal feud with KYY to prove ur better than him.....anyway, if got confident, just wait
2020-01-01 09:45
In July 2018 it was reported that construction of the plant was 30% complete.[11]
In June 2019 the completion date for Unit 1 was delayed to 2020 and the completion date for Unit 2 was delayed to 2021 in the Ministry Of Industry And Trade's report on the implementation of the revised seventh Power Development Plan (PDP7).[12]
2020-01-01 11:21
http://vepg.vn/wp-content/uploads/2019/06/MOIT_Report_58_BC_BCT.pdf
2 Hai Duong thermal
power plant
2x600 BOT 2020-
2021
2021 Delayed by 1 year
2020-01-01 11:25
When ppls start to promote , that’s mean it reaches fish tail .. no more fish meats to eat .. I wish I’m wrong larrrr.. cheers ..
2020-01-01 14:17
Dear ALL i3 members,
HAPPY NEW YEAR 2020
W 2020 vision to all great winning stocks at right timing on KLSE ...
Could some1 enlighten this?
IPP was once the best of the BEST deals from beend.
WHY r ytlpower n malakoff so so v low in prices now ?
2020-01-01 15:07
Aiyo dear probability,
I wish you ALL the BEST on KLSE...
my.ah.ni.hard on me lah !
I do buy the right Stocks at Perfect right timing most of the times every yr.
I oso have BAD stocks to cut loss. to cut is always v difficult.
Final cut is the DEEPEST, u know !
2020-01-01 15:26
It's perfectly OK w uncle KYY's opinion.
My guru said:
Every man has a right to his opinion, but no man has a right to be wrong in his facts.
Bernard Baruch, a yahudi n adviser to 3 US presidents
2020-01-01 15:32
The BEST motivational story ever told n most popular in the world is :
ACRES OF DIAMOND IS IN YOUR BACKYARD
This story is so encouraging n empowering in all facets of human LIFE ...
2020-01-01 17:16
For now, JAKS looks GOOD.
Pls stay steady eddy in price, then the next daily macd gc or better at 2nd or 3rd gc = the v BEST Right Timing to sailang ...
1st to protect our back, learned from playing afool(260k rm lesson) w hengyuan,
The worst selling pt (x2, y2) = C < week ema 18
Loss, we can't blame kyy or anybody.
We learn deeply from mistake.
2020-01-01 18:39
For those who are still unaware on the official news earlier in Sept 5, 2019:
https://baohaiduong.vn/chinh-tri/dong-chi-nguyen-manh-hien-lam-viec-voi-chu-dau-tu-du-an-nha-may-nhiet-dien-bot-hai-duong-115554
extract from above translated to english:
At the meeting, the business representative briefed the provincial leaders about the progress of the project. BOT Hai Duong Thermal Power Plant has 2 units, capacity of 600MW. As planned, by March 3.2020, the No. 1 generator began to generate electricity. By May 6.2020, the plant will be completed commissioning, officially generating electricity into the national grid.
.......
since then there has been considerable progress on unit 1 where the steam blow test is now scheduled on 4th Jan
2020-01-01 21:30
They are just 2 months away from power generation (not to the grid)...and 4 months away to the grid (commercial operation) for unit 1.
as earlier they targeted 3rd March (as per above news on 5th Sept).
..................................
Considering the steam blow test date... i would say an improvement of about at least 2 weeks now..
2020-01-02 09:01
Thank you OTB. Serba is good quality stock, please consider after you study.
2020-01-02 13:41
Those who attack on Jaks must remember OTB recommend Jaks when it was below RM1. Be grateful instead of attack him. He didn’t do anything wrong
2020-01-02 13:42
Dear JensenChin,
Please email me, I will give you FA report of Serba.
I cannot mention anything here.
Please find out my email in I3.
Thank you.
2020-01-02 14:54
Posted by leapkcfy > Jan 6, 2020 5:16 PM | Report Abuse
Latest update by the local?
andry_ong https://m.facebook.com/story.php?story_fbid=156538069016647&id=108...
Latest project update in Veitnamese, basically the 1st unit will operate 1st week of April and will join to national grid on the 15may2020.
Posted by ok > Jan 6, 2020 5:37 PM | Report Abuse
and estimated 7.5 billion kwh output annually.
----------------------------------------
Ans :
Please refer to DK66's article below,
https://klse.i3investor.com/blogs/Jaks%20resources/2019-10-02-story228...
I just take a quick calculation on the net profit of Hai Duong power plant.
8.094 billion KWH = RM310 million.
7.5 billion KWH = RM 310/8.094*7.5 = RM 287 million.
Net profit for 2021 (Full production and 30% stake) = RM 287 million.
EPS = 287/643 = 0.446
Base on PER = 10, the target price of Jaks should be RM 4.46 in 2021.
This figure is even higher than my initial estimated net profit of RM 250 million in 2021.
Special thanks to DK66.
I always praise DK66 because he is the most knowledgeable person on Hai Duong power plant in Vietnam.
I admire his hard work and respect his kindness to share his knowledge in I3.
I never buy Jaks in 2016/7/8 until 8/10/2019, I buy Jaks because I trust DK66's report.
I spent almost 4 days to really digest all his reports, I am convinced that his postings are the most accurate one so far.
Please do not attack him unless you can prove that you are better than DK66.
Thank you.
2020-01-06 20:32
actually nobody believe KYY due of bad reputation, he always like to talk history
2020-02-10 09:58
KYY always boasted about his founding of IJM, Gamuda etc
but if you dig deeper, you will discover that he sold them long long time ago when they are still tiny company
those companies subsequently grow into huge success
but their success have got nothing to do with him
he can fool ordinary people, but he cant fool seasoned corporate people like me and OTB
2020-02-10 10:10
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JensenChin
OTB, why not buy Serbadk? Meet your criteria and proven track record of profit
2020-01-01 00:00