Icwin, my sense is that the CEO of Jaks is pretty strong in securing deals, but based on its corporate developments history, it is clear to me that the corporate finance and operation execution of JAKS are terrible, not to mention the extremely weak investor relations. The Board has no qualm in issuing new shares at deep discount, i.e. the upcoming Rights issue at 50% discount, topping it off with warrants ! How much more diluition can the poor shareholders ask for.My sense reading from the comments here is that not many shareholdres are objecting to the deep issue price. As for your scenario of crystallising the underlying value of the assets especialy the power assets shares, I dont think the management under the concept and therefore is unlikely to adopt such discipline financial approach. So, as minority shareholders, please band together and present your views on how the management and Board shld manage the company..

DK, if I may response to your commment again, respectfully..again my response in BOLD.

Chuckie1, you are a very careful guy but you are too pessimistic. You should look for answers for your "maybe".

GIVEN THE WEAK MANAGEMENT AND BOARD OF JAKS, IT IS BEST THAT ONE WERE TO ERR ON THE SIDE OF CAUTION THAN, CLEARLY, TAKE UNNECESSARY RISKS. I HAVE READ THROUGH ALMOST ALL THE POSITIVE REPORTS ON JAKS AND WHILE THERE ARE SOME AREAS OF THOSE REPORTS WHICH IN MY OPINON MAY HAVE BEEN STRECHED A BIT, I DO NOT DISPUTE AT ALL THE POTENTIAL CASHFLOW (ALBEIT AT LATER YEARS VIS-A-VIS THE OPTIMISTS) AND VALUE OF THE POWER ASSETS. IT IS NOT INCORRECT THAT SOME OF THE POSITIVE REPORTS WERE BASED ON ASSUMPTIONS, OR IN YOUR WORDS, BASED ON "MAYBE' AND HERE IS WHERE I DIFFER WITH THE OPTIMISTS. WHY GUESS, WHY CONJECTURE. CLEARLY, AND I AM SURE YOU WOULD ALSO AGREE AND WILL DO, PRESENT THE UNCERTAINTIES OVER KEY ISSUES TO THE BOARD AND MANAGEMENT OF THE COMPANY IN THE UPCOMING EGM FOR ALL THE STAKEHOLDERS TO GAIN INSIGHTS AND CLARITY.

If you don't think Jaks is worth your time, don't bother making so many guesses.

I USED TO BE A SHAREHOLDER OF JAKS BUT HAD SINCE SOLD OUT. I AM STILL A HOLDER OF THE WARRANTS. YOU HAD CORRECTLY POINTED IN ONE OF YOUR EARLIER COMMENT, YES, I HAVE JUST STARTED LOOKING INTO THE DETAILS OF JAKS, JUST LAST WEEK. THERE ARE CLEARLY SOME VERY POSITIVE POINTS IN JAKS BUT I HAVE ALSO CAME TO A CONCLUSION THAT THE MARKET (ALSO KNOWN AS INVESTORS/SHAREHOLDERS) HAVE NOT FULLY AWARE OF SOME OF THE RISKS, SPECIFICALLY THE FINANCIALS RISKS, AND I THINK IT IS AN INJUSTICE OF THE MANAGEMENT AND BOARD FOR NOT CLAFYING THE ISSUES ASAP. AS AN PRIVATE INDIVIDUAL, MY CONSCIOUS HAVE GUIDED ME TO SHARE SOME OF THE CONCERNS HERE IN THIS FORUM. OF COURSE, EVERYONE HAS CAN MAKE UP THEIR OWN DECISIONS AND THEY ARE WELCOME TO REJECT MY VIEWS AND POINTS, BUT ALMOST (DARE I SAY ALL !?) ALL OF MY POINTS ARE BASED ON FUNDAMENTALS AND REASONABLE ASSUMPTIONS, AND I AM MORE THAN HAPPY, TIME AND EFFORTS GRANDED, TO DISCUSS THE VALIDITY OF MY POINTS. I HOPE THAT I AM ABLE TO ATTEND THE UPCOMING EGM AND POSED TO THE BOARD MY CONCERNS AND THAT THE BOARD WILL RESPONSE WITH CLARITY AND CERTAINTY FOR THE SAKE OF ALL THE STAKEHOLDERS.

I think you should wait for Jaks to see earnings from JHDP first before making your decision.

NOT NCESSARY. IF JAKS SHARE PRICE WERE TO FALL BELOW RM0.50 (JUST A NUMBER), MY RISK-REWARD JUDGEMENT WILL MOST LIKELY LEAD ME TO BUY THE SHARES AS IT WILL BE MY JUDGEMENT THAT ALL THE NEGATIVES HAVE BEEN FULLY FACTORED INTO THE SHARE PRICE. ONE MUST BE ABLE TO DISTINGUISH THE FUNDAMENTAL VALUE OF THE COMPANY VIS-A-VIS THE SHARES.

The success of the Rights issue is absolutely crucial for the going concern position of JAKS (meaning.. if the Rights issue does not go through, JAKS could potentially face insolvency) which obviously have a major impact on the share price. As of now, the major shareholders of JAKS ie. the CEO and ED, are committed to take up RM50 mil of the Rights Issue. What is ABSOLUTELY CRUCIAL to watch out for is for the rights issue is FULLY UNDERWRITTEN under the minimum amount to be raised scenario. There are certains terms and conditions that need to be fulfilled in order for the underwriter to agree to do so. and it was mentioned that these terms and conditions will be laid out the Abridge Prospectus. So, guys,at this stage, the issue whether JAKS shares are cheap or expensive shld take the backseat. The crucial issue is whether JAKS can overcome the financial crunch that it facing in the immediate months. But having said this, at RM0.76 per share, in my humble opinion, it is not reflecting the insolvency risks/dangers that the company is facing.! (why not ? I guess not many people believe or is aware of the insolvency risks..).

DK, thank you for your response on the issue of cashflow from the power plant by inferring from AES's 51% stake in its Mong Duong II power plant. As usual, my reponses in BOLD.

1. Chuckie1, you should visit the official website of AES corporation and check up the dividend information before assuming the information shared here is from private conversation and non public info.

https://www.aes.com/investors/financial-reports-summary/default.aspx

I HAVE READ YOUR ARTICLE ON THE POTENTIAL CASHFLOW OF AES'S POWER PLANT. YES, I AGREE WITH YOU THAT THERE THE SIMILARITIES OF JPP AND AES'S POWER PLANT ARE ALMOST MIRROR-LIKE, AND IT IS NOT TOO FAR FETCHED TO INFER THE POTENTIAL CASHFLOW FROM JPP'S POWER PLANT FROM THAT OF AES. HOWEVER, ONE CANNOT BE ABSOLUTELY CERTAIN THAT THE DEBT REPAYMENT SCHEDULES OF THE 2 POWER PLANTS ARE THE SAME. IT CAN BE ARGUED THAT AES'BARGAINING POWER, BEING A FORTUNE 500 COMPANY, WITH THE FINANCIERS OF THE POWER PLANT PROJECT WILL BE STRONGER THAN THAT OF JPP'S (IN MY OPININ WILL JUST TAKE WHATEVER TERMS AND CONDITIONS BEING PRESENTED BY THE FINANCIERS) AS AES'S FINANCIALS ARE STRONGER AND MAY HAVE OTHER ALTERNATIVE FINANCING AVENUES. WHO KNOWS ? IT MAY BE THAT JAK'S CEO MAY HAD MANAGED TO SWEET TALKED INTO SECURING A SWEETHEART DEAL. WHO KNOWS? MY RESPONSE IS.. WHY MAKE SUCH GUESSES. WHY DONT WE JUST POSE THIS CRUCIAL QUESTION TO THE MANAGEMENT OF JAKS IN THE UPCOMING EGM. WITH CASHFLOW CLARITY FROM THE POWER PLANT, ONE WOULD BE ABLE TO ASSESS WITH GREATER ACCURACY THE SOLVENCY OF THE JAKS (WHICH NOT IN ABSOLUTE EXAGGERATION BORDERING ON INSOLVENCY ESPECIALLY IF IT WERE TO LOSE THE LEGAL CASE WITH STAR MEDIA).

Hello DK, thanks for your message. If I may response to your 2 comments, typed in BOLD.

1. If you are truly interested in Jaks, maybe you should do some research on mong duong II on its dividend distributions after COD.

ONE CAN AND SHOULD ONLY MAKE CONCLUSIVE DECISIONS BASED ON PUBLIC INFORMATION PROVIDED IN OFFICIAL DOCUMENT. ONE SHOULD NOT INDULGE IN PRIVATE CONVERSATION AND SHARING OF NON PRIVATE INFO FROM THE MANAGEMENT OF THE COMPANY. I HAVE READ OF STATEMENTS OF DIVIDEND OR (FREE) CASHFLOW FROM THE POWER PLANT OF USD XXX MILIONS PER YEAR ETC BUT THESE STATEMENTS HAVE NOT BEEN OFFICIALLY CONFIRMED BY THE MANAGEMENT. IT WILL BE GREAT IF THERE ARE SOME DEPENDABLE REPORTS AND HAVE BEEN CONFIRMED BY THE MANAGEMENT OF THE DIVIDEND OR FREE CASHFLOW POLICY OF THE POWER PLANT. IF YOU POSSESS SUCH DOCUMENT, I WOULD LOVE TO READ THEM, AND WILL CERTAINLY COME FORWARD IN SHARING THE INSIGHTS WITH THE INTERESTED STAKEHOLDERS. I HAVE READ THE CIRCULAR ISSUED BY AMBANK ON 28 AUG 2015 BUT THERE WERE NO MENTION OF DIVIDEND POLICY, DEBT COVER RATIO ETC WHICH CAN LEAD TO SOME SENSE OF THE EXTENT OF THE FREE CASHFLOW PAYOUT FROM THE PROJECT. AS I HAD MENTIONED EARLIER, ITS JUST MY PAST EXPERIENCE WITH PROJECT FINANCING THAT IT IS EXTREMELY RARE FOR DEBTHOLDERS TO ALLOW DIVIDEND OR FREE CASHFLOW TO EQUITY HOLDERS TO BE PAID UP IN THE INITIAL YEARS OF START UP OF PROJECTS (3 TO 5 YEARS) AS DEBT HOLDERS WOULD REQUIRED SUBSTANTIAL PARE DOWN OF DEBTS IN THE INITIAL YEARS TO REDUCE THEIR HUGE INVESTMENT (IN THE CASE OF JPP, DEBT HOLDERS CONTRIBUTE 75% OF THE INVESTMENT CAPITAL OF THE PROJECT.)

2. It also won't do you any good to pre-conclude on Jaks cash flows and its ability to take up the 10% option.

SIMILAR TO THE MY THOUGHTS GIVEN ABOVE, I HAVE READ OF THE 10% OPTION TO BE TAKEN UP FROM PAST RIGHTS ISSUE, CASHFLOW FROM THE POWER PLANT AND EPCC CONTRACT PROFITS. AGAIN, THESE KIND OF CONCLUSION IN MY OPINION ARE HEARSAY. ANYHOW, PLEASE SHARE YOUR INSIGHTS HOPEFULLY WITH SOME FORM OF EVIDENCE OF THE COMPANY'S AVENUE TO FINANCE THE 10% OPTION WHICH IN THE RIGHTS ISSUE CIRCULAR, HAD CONFIRMED WILL COST RM200 MIL.

LOOKING FORWARD TO YOUR INSIGHTS. REGARDS. CHUCKIE

In 2019, the renumeration of the CEO of JAKS was a total of RM2.055 mil including EPF and Socso, or an average salary of about RM171,327 per month, excluding the RM12.834 mil in LTIP, bringing in a grand total of RM14.925 mil. Are the shareholders able to accept such compensation package in the light of the negative shareholders' creation (in the light of continues issuance of new shares at continuously lower issue price..

In the Rights Issue circular, it was highlighted that under the Maximum Scenario of funds raising, there will be a total of 59.0 mil of new shares to be issued under the LTIP programme to the management of the company !! Please, can someone please clarify for me, are these shares, please tell me that I am wrong, are issued WITHOUT any considerations (ie WITHOUT ANY PAYMENTS) to the CEO and Executive Directors and managemnets !! If in the event that I am wrong, and these shares are indeed going to be issued FREE, there are absolutely NOTHING the shareholders can do ?

There are a lot of expectations from dividend payout from the power plants in the short term given the fact that assets is currently undergoing commercial test runs. I have even read of comments of " potential cash inflow of approximately RM300mil per year into Jaks is expected from the power plant operation. If the management is to give out one third or RM100mil to Jaks shareholders as dividend". To be frank, I have no clarity on this issue at all. However, based on my experiences with project financing, the cash inflow in the first 5 years are predominantly skewed heavily towards paying down the debt (why would debt holders which are paid lower returns allow equity holders to be paid up earlier than debt holders, its simple risk-return balancing !). In short, one should not expect any major free cashflow to equity holders i.e. JAKs from the power plant in the, at least in the first few years of operations. What boggles me is that given such a critical cashflow to JAKS is to its financial survival, this issue still has not been clarified by the poor shareholders of this company. Perhaps it is time this issue is presented to the Board of JAKS in the upcoming EGM, dont you think?

If not mistaken, there is also great confusion over the execution of JAK's call option to raise its shareholding in the power plant from 30% to 40%. Lets not mention these additional 10% stake, the underlying 30% has not been fully subscribed what more of the additional 10% fom the call option. It seems that shareholders do not realise that the purchase of these additonal 10% stake will cost USD 46.7125 mil or about RM200 mil. Given JAK's current financials, it is close to impossible for it to exercise the 10% option but some shareholders are also expecting dividend income from a 40% stake in the power plant. Fat Chance !!

There seems to be a lot of confusion over the subscription of Jaks via JPP in the power plant. Some shareholders were under the impression that the subscriptions have been fully provided in earlier rights issue and also arising from profits from the EPC contract (gosh !). As it turned out, JAK have not fully covered the equity injection, and the bulk of the latest rights will be used to meet this aim. Based on the disclosure on the rights circular, JAK has only subscribed 65% of its equity obligation in the power project, leaving another 35% or USD 49.14 million (RM 211 mil) to go. Of the USD 49.14 mil, the rights issue will cover USD 30 mil; however, the circular mentioned that they had earlier covered USD 3 mil, thus net uncovered at USD 16.14 mil or about RM70 mil. So, how on earth is JAK going to fund these balance USD 16.1 mil or RM 70 mil ? Why dont some poor foresaken shareholder please ask the Board in the upcoming EGM. The circular did however highlight "JPP may finance the remaining Project cost subsequent to the Subscription via its internally-generated funds.". For me, given how crucial the issue is, clarity and certainty to the shareholders are seriously required.

In the upcoming EGM, one should question the auditor on the its decision of not recording the negative financial effect of the legal suit (which is set for hearing on 19 August) by STAR Media against JAKS in the contingent liabilities. Of course they will response by stating the legal opinion of the legal firm representing JAK of the good chances of winning the case, but going by past precedent in which the company and lawyer had lost in the RM50 mil legal suit with STAR MEDIA, would it not a fair argument that the auditor did not, and again this time repeating it, living up to its responsibility of informing the shareholders of a fair and objective representative of the company's financial health !

In opinion, the financials of JAKS is very weak to the point of the need to question the auditor in the upcoming EGM on the going concern status of the company. The specifics are follow:

In the quarter ended 31 March 2020, Jaks suffered a negative cashflow of RM43.574 mil, and further financing obligations, leading to a depletion of RM55.140 mil cash, leaving a balance of RM 25.141 mil as of 31 March 2020. I do not have the specifics interests and principal payments for Jaks in Q2 and Q3 but we can infer based on Q1 2020 total financing obligations of RM14 mil. If we simplistically assume the same cash depletion in Q2 2020 purely from the RM 14 mil in debt obligations, cash holding will be down to RM11 mil which in my opinion is not be enough to sustain the company's holding company expenses and debt obligations in Q3 2020. Of course this estimate completely ignore any operating losses which could diminish the cash holdings.

One can argue and hold of the belief that the company is UNLIKELY TO DEFAULT ON ITS FINANCIAL OBLIGATIONS as there is a possibility of debt restructuring with the banks etc. BUT MY SENSE IS THAT THE MANAGEMENT OF JAKS IS VERY WEAK IN CORPORATE FINANCING (ON TOP OF OPERATIONAL EXECUTION) and NOT COMPETENT enough to pre-empt AND MORE IMPORTANTLY FULLY ADDRESS this IMPENDING cashflow crunch.

YES, THE upcoming issue could hold up the company again. BUT THE POINT THAT I AM TRYING TO PUSH OUT HERE IS THAT THE EXTREMELY WEAK FINANCIALS OF JAK IS COMPLETELY NOT DISSEMINATE AND UNDERSTOOD BY THE SHAREHOLDERS, AND THE BOARD AND MANAGEMENT OF JAKS ARE NOT LIVING UP TO THEIR RESPONSIBILITY TO ENSURE THE GOING CONCERN OF THE COMPANY. SO, SHAREHOLDERS, PLEASE BE AWARE... SERIOUSLY.

THE FOLLOWINGS WERE POSTED ON 8 JUNE 2020 BY THE AUTHOR ON THIS THOUGHTS ON THE DIRECTION OF JAKS SHARE PRICE. MY COMMENTS ARE I BOLD BOLD BOLD (THE REST ARE VERBATIM BY THE AUTHOR DK)

Personally, I strongly believe the price will resume uptrend C for the following reasons.

1. Jaks price was around RM1.50 in late February 2020 before Covid19 in anticipation of commissioning of the power plant. Therefore, present price level is comparatively very cheap at 40% discount to RM1.50.

SINCE 8 JUNE 2020, JAKS SHARE PRICES HAVE WEAKENED FURTHER. JUST BECAUSE THE SHARE PRICE IS AT A DEEP DISCOUNT TO ITS PAST HIGHS, PERSONALLY I DONT THINK THIS A FUNDAMENTAL REASON TO BUY THE STOCK. TECHNICALLY, ONE CAN ARGUE THIS IS THE UPSIDE POTENTIAL (AS IT HAS TRADED AT RM1.00) BUT ONE CAN ALSO ARGUE ON THE SAME LINE OF THOUGHTS THAT THE SHARE PRICE COULD (THEORETICALLY) FALL 50% DOWNSIDE TO THE PAST LOW OF RM0.42.

2. The right issue proposal promised at least 50% discount to TERP ensures that the price of Jaks must remain above RM1 during price fixing dates in order to fix the right share at RM0.40.

THIS OPINION CALLS FOR A STRONG BELIEF IN THE EXISTENCE OF SOME PARTY OUT THERE, MOST LIKELY RELATED TO THE MAJOR SHAREHOLDERS, ENGAGING IN SOME MARKET-MAKING ACTIVITIES IN "PUSHING" AND "HOLDING UP" THE SHARE PRICES TO, AS INDICATED BY THE AUTHOR, ABOVE RM1.00. IT IS NOT INCORRECT TO MAKE SUCH BOLD ASSUMPTION AND RATIONALE FOR BUYING THE SHARES BUT THIS IS NOT A FUNDAMENTAL DRIVEN STRATEGY. IT IS AKIN TO "CLOAK AND DAGGER" STRATEGY. SO, FOR THOSE COMFORTABLE WITH SUCH STRATEGY, JUST BE AWARE OF THE RISKS IF SUCH 'SYNDICATE' DID NOT MATERIAL.
CAVEAT EMPTOR.

3. The subscription of right shares coincides with the COD of Unit 1 in Q4 2020. The commissioning of power plant will be a major impetus to attract interests of investment funds.

OF 4 FACTORS CITED BY THE AUTHOR, THIS POINT IS THE CLOSEST TO FUNDAMENTAL INVESTING. HOWEVER, IN MY HUMBLE OPINION, THE AUTHOR HAS MISSED THE OTHER COUNTERBALANCE TO THE POSITIVE DEVELOPMENT IN THE START UP OF THE POWER PLANT, WHICH IS THE EXTREMELY WEAK FINANCIALS OF JAKS, THE HOLDING AND LISTED COMPANY, WHICH IS YET TO BE FULLY DISSEMMINATED AND FACTORED IN THE SHARE PRICE.

4. The current right issue made Jaks a disappointed and hated stock, most would have sold off and left. Those who remain will likely subscribe for the right shares.

SUBSCRIPTIONS FOR THE RIGHTS ISSUE BY EXISTING SHAREHOLDERS IS NOT A REASON TO BUY THE STOCK OR AN IMPETUS FOR THE SHARE PRICE TO RALLY.

5. On 29 May 2020, CEO Ang Lam Poah bought 2m shares at RM0.885

YES, ONE CAN ARGUE THAT A PURCHASE BY THE MAJOR SHAREHOLDER, AND MORE IMPORTANTLY IS THE CEO OF THE COMPANY, IS AN INDICATION OF THE CONFIDENCE OF THAT PARTY FOR THE SHARE PRICE, BUT HAD ONE WERE TO ACT ON SUCH EVENT, HE WOULD NOT BE SITTING ON LOSSES. VERY IFFY LINE OF THOUGHT..

6. Unit 1 of the power plant will likely achieve synchronization by end June or early July, and commences trial run for 2 months during which Jaks will earn energy payment from EVN. I believe Jaks’ price will react positively to such news.

POINT TAKEN BUT MY BELIEF IS THAT ANY ENERGY PAYMENT WILL MOST LIKELY BE USED TO PAY DOWN THE FINANCING DEBT OF THE POWER PLANT. DIVIDENT PAYMENT TO SHAREHOLDERS OF THE POWER PLANT, IE. JAKS, FROM THE POWER PLANT IN THE NEXT 3-5 YEARS ARE NOT REALISTIC AS ANY FINANCIER WOULD REQUIRE A SUBSTANTIAL PORTOIN OF THE DEBTS ARE PAID DOWN BEFORE ALLOWING SUCH SHAREHOLDERS DIVIDENDS. AGAIN, THIS POSITIVE POINT OF ARGUMENT DOES NOT TAKE INTO ACCOUNT AT ALL OF THE OVERBEARING WEAK FINANCIALS AT THE HOLDING COMPANY.