Please Explain !
JAKS RESOURCES - FAT or THIN ?
REVISED JAKS RESOURCES CASH FLOW PROJECTION
I received a request to do a comprehensive cash flow projection based on the confidential table of capacity charges I received recently. He requested for NPV valuation based on the net cash flow using 10-12% discount factor. He understood that it is very difficult to be precise on a long term projection and he quoted me saying "You don't need to know the weight of a man to tell if he is fat".
Lets explore;
Some facts:
JHDP is exempted from corporate income tax for taxable profit from the production and sale of electricity for the first four profit-making years, after which will be subject to a 5% corporate income tax rate for the following nine years and a 10% corporate income tax rate thereafter.
Some assumptions:
- The capacity charge payments calculated base on the table I received is assumed to be the total net revenue from the JHDP power plant. The net cash inflow of JHDP before interest expense for year 2022 based on the Annual Report was RM1,103m, thus, reasonable assumption.
- JPP will distribute all the revenue to the shareholders as dividend in the year of income.
- RM250m loans with 8.5% interest rate from Singapore Banks will be taken to subscribe for the 10% additional interest in JPP to be repaid over 5 years period.
- Net current assets of RM144m as at Dec 2022 will be fully realised without further impairments on a straight line basis over a period of 5 years.
- Bank borrowings with average interest rate of 7% will mature according to the maturity schedule as stated in the 2022 annual report with no further borrowings.
- LSS4 will generate annual net cash inflow of RM10m consistently.
- Local businesses continue to face operation net cash outflow of RM17m annually over the next 8 years.
- Any shortfall in net cash flow is assumed to be refinanced by short term borrowing at 7% interest rate and payable within the following year.
- Jaks will not taxed in Malaysia on dividend from JHDP. Otherwise, Jaks will have to pay addition tax based on the difference in Malaysian and Vietnam tax rates. The Impact will be significant.
The cash flow projection table covers the entire concession period of the power plant.
(The figures are in RM' million)
The Net Present Values (NPV) of the cash flow stream using discount factors 10 - 13% range between RM446m to RM664m. Assuming no addition share issuance from conversion of warrants, private placement, rights issues, and LTIP, the NPV per share ranges between RM0.195 to RM0.29.
Note that Jaks may face up to 9 years of negative cash flow.
So, can you tell from the projection whether Jaks is FAT or THIN ?
Thank you for your attention.
Gotyou
This article is purely for educational purposes. This is not a buy or sell recommendation ! You should consult your dealers or remisiers before making any decision.
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Discussions
1 person likes this. Showing 50 of 65 comments
their mgt must be thinking integrity is a food name can be eaten into tummy... nothing important.
2023-07-24 12:08
Dk is my good friend , he does not agree with what you did. He will slap you .
2023-07-24 12:09
What a shame to use my good friend inaccurate DCF to mislead the readers here .
2023-07-24 12:17
You are not telling truth since the source of your information can not be verified. Please stop doing more damage to my good friend DK
2023-07-24 12:18
Quote,"I received a request to do a comprehensive cash flow projection based on the confidential table of capacity charges I received recently. He requested for NPV valuation based on the net cash flow using 10-12% discountrequested for NPV valuation based on the net cash flow using 10-12% discount factor. He understood that it is very difficult to be precise on a long term projection and he quoted me saying "You don't need to know the weight of a man to tell if he is fat" unquote
So is Aseng saying?
1. It was DK that provide the confidential table of capacity charge to Gotyou.
2. Gotyou use Aseng good friend DK' inaccurate DCF to mislead the readers here.
My question since DK is an accountant then I would not thik DK will ever make a request to Gotyou for NPV valuation based on the net cash flow using 10-12% discount?
Most likely all the above have nothing to do with DK.
2023-07-24 12:32
I had already complain you are exploiting his fact and data to spread fear and mislead the readers
2023-07-24 12:35
Posted by Asengkianjoo > Jul 24, 2023 12:09 PM | Report Abuse
Dk is my good friend , he does not agree with what you did. He will slap you .
Most likely above is false. If it is true then Asengkianjoo can just call up DK and make clarification with DK and not simply talking without sense in this forum.
2023-07-24 12:44
What ignorance ? Ignorance of damage done with good intention and Ignorance of damage to be done with whatever intention .
2023-07-24 12:58
Are you sure what you said will be reflected in the market. Open your eye big big , how is the market react after so many gotyou negative posts
2023-07-24 13:02
Why claim ignorance when KYY and later OTB had leave JAKS for good and red flagged poor/bad management and trustworthiness/integrity of BOD especially ALP?
2023-07-24 13:09
As a trade no one will stop you to bottom fishing but as an investment the above article is very useful in telling you, you need to wait till 2031/32 to see a positive cashflow.
2023-07-24 13:13
I believe i3 forum is a good place for everyone to post their diverse opinions/views on investment so that all can benefit from the diverse information and make their informed-investment decision.
As should everyone/anyone believe in God?
That is an answer between everyone/anyone and everyone/anyone creator.
2023-07-24 13:22
GOTYOU :I received a request to do a comprehensive cash flow projection based on the confidential table of capacity charges I received recently. He requested for NPV valuation based on the net cash flow using 10-12% discount factor. He understood that it is very difficult to be precise on a long term projection and he quoted me saying "You don't need to know the weight of a man to tell if he is fat". ..................................................... 1. who is the one requested you to do so ........ YOU DOT KNOW ? 2. how reliable is his shared information is valid and true ? ...... YOU DO NOT KNOW 3. What is the damage that will be done to the public if the information is not accurate ? .............. YOU DO NOT KNOW
2023-07-24 13:56
WHY ????? IS YOUR OWN EGO THAT IMPORTANT THAT YOU ARE WILLING TO SELL YOUR CONSCIENCE ?????
2023-07-24 13:57
i had deleted all the post . very very sorry . I am sinful. I will punish my self to donate RM 200 to UNICEF for the wrong I had made . please forgive me my good friend
2023-07-24 14:16
what is the moral of the story?
WHAT YOU THINK IT MUST BE RIGHT CAN BE WRONG !!!!!
market is full of surprise and unexpectation !
why are just playing a probability game with FA and TA !
nothing is 100% but >50% is likely but still not guaranteed
2023-07-24 14:23
Posted by Asengkianjoo > 4 days ago | Report Abuse
If I were gotyou , I will keep quiet .let the mistake be mistake rather than to make another mistake after 2 mistake
Posted by Asengkianjoo > 4 days ago | Report Abuse
Gotyou, do you know it is me who share with you the information . I never expect you can he that easily cheated
The above is true？
2023-07-24 15:00
Now I can watch movies with ease of mind now. what i learnt ? count 10 before I talk . if not, be prepared to pay RM 200 penalty
2023-07-24 15:05
curious ,
you are right to point . it can be Aseng or Curious oe Sslee or anyone because you DO NOT KNOW WHO and it is classfied as CONFIDENTIAL !!!!
2023-07-24 15:07
Confidential then made public ? TUA_PEK GONG also can not agree what more a rational mind
2023-07-24 15:08
moreover Jaks cash is nothing new . it is already a well know right from the first day we bought
2023-07-24 15:10
PP and RI are also nothing NEW !!! Jaks is small company doing a mega project . I have an earthwork construction company, my company also facing cashflow after MCO no works and we wish to replensish our mechinery to enhaance the company profitability . after all the PP , now we we among the top subcontractor in the field . what is the big deal of the cash squeeze , if the company still has a strong income from the power plant to restructure the repayment if needed . why amke thing so complicated . cash flow is just temporary , it can be resolve when the core business is still promising . you are an outsider , not even has a business of your , what nut do you know well other than playing with the figures
2023-07-24 15:21
curious ,
not me too ......
must be his own tua-pek-gong .
this idxxiot made me kenal panelty RM200 for nothing . still dare to say no damage done
2023-07-24 15:24
OMG!!! hope no shameless liar here, otherwise TUA_PEK GONG will punish them
TUA_PEK GONG is a very good god and shouldn't be a subject for making jokes
2023-07-24 15:28
Gotyou, how is the utilisation of the Vietnam plant? currently Vietnam is shortage of electricity, electricity consumption will increase in future...
2023-07-24 15:36
really Beh-Ta-Han ..., first time may be it is your ignorance . second time may be you are egoitic . third time now . i have good reason it is motive driven to supress the price to accumulate at low
2023-07-24 15:43
soon9913, majority of the power plant profit is contributed by the capacity charge payments. Therefore higher or lower electricity production from the power plant will have marginal impact on the bottom line.
2023-07-24 15:45
look at the price movent yourself , a TA beginner also can seethere is operator supporting the price at current level. i also do not hope to see the price spike up too , it will spoil the effort of the operate to collect more at a low cost , then limit up with a good news . what I said is reliable ? of course NOT reliable but reasonable and logical like what Gotyou did
2023-07-24 15:48
assumption to repay loan to SG bank within 5 years also not realistic there is possibility for refinance another 5 or 10years.....? concession still have 22 years left...
2023-07-24 15:49
soon9913, the longer the repayment period, the more interest you have to pay.
2023-07-24 15:51
take loan because no cash lo ...the article above mentioning up to 9 years negative cash flow ma.. it is not realistic to use 25 years income to pay for 5 year loan.. the loan has to be 10 / 15 years tenure only make sense
2023-07-24 15:55
But longer term loan increases the risks for the bankers. That is probably why the JHDP loan itself only 10 years tenure.
2023-07-24 15:58
u see the assumption No 3 RM250m loans with 8.5% interest rate from Singapore Banks will be taken to subscribe for the 10% additional interest in JPP to be repaid over 5 years period.
5 years not making sense
2023-07-24 16:02
if that additional 10% needs pay high interest and not profitable, better they drop 10% subscription lo
2023-07-24 16:02
but the lousy mgt always think of their own pocket only how to get more freee share ... never think how to improve the company's profitability
2023-07-24 16:04
Anyone approached the investor relation on whether the capacity charges are declining over the concession period?
2023-07-24 16:10
this article got many unverified assumptions.. but one true fact is the company run by lousy management.
2023-07-24 16:13
Cash flows is the life blood of a company. Without disrespect to any parties or person. A negative cash flow for such a long period is disastrous not to mention a disincentive for any long investor pinning for dividend yoeld
2023-07-27 08:34
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
soon9913
sense maker, you are right !! haha ,
2023-07-24 12:07