Personally, I think that private chat group can be harmful to group members sometimes as members who are unwilling to cut loss find comfort in a private group with common interest. Together, they seek excuses not to cut losses and continue to endure more losses together. A few members who did not like DK's sell call formed a small chat group to encourage each other to continue to hold on. This is not a smart way to invest.

Instead of paying dividend in cash, Jaks has opted to DRIP to entice shareholders to opt for cheaper shares in place of cash. This will create further selling pressure on share as shareholders will sell portion of their shareholdings and opt for shares dividend at cheaper price. ALP will benefit from DRIP as more issuance of shares as dividend will expand the share base for more free share grant to himself.

Jaks' liquidity problems may have forced it to forego the option to subscribe for additional 10% interest in JHDP at original cost.

For those who have sent requests to joint DK's Jaks group chat, I am sorry to inform that DK will not accept new group members for the time being. DK has disposed all his position in Jaks due to its anticipated cash flow problems in the foreseeable future which is likely to result in more equity fund raising exercises in the future. So, stay out of Jaks for now unless you are prepared to hold until JHDP fully repaid its loan (in 7 years).

If JHDP is indeed so magnificent then there is no reason for Jaks not to exercise its option to subscribe for the additional 10% shareholdings in JHDP at original cost. Jaks has plenty of time to source funds for the option. It is totally unacceptable that Jaks has to give up the low hanging fruit due to fundings issue. Jaks management must be honest on its decision not to take up the option, if so decide.

very soon

There is no excuse for giving up on the optional additional 10% shareholdings in the power plant in Vietnam which has an expected payback period of less than 5 years unless there is some ugly hidden truth about the power plant.

Hi, It's Compounding,

As DK has pointed out, it is extremely difficult for Jaks to get further bank financing due to various reasons. Its apparent low gearing ratio is due to its investment in JHDP without which its gearing ratio would be very high. The power plant will be handed over to the Vietnam government at the end of the concession period at zero value, hence, the investment value in JV will be written off if not already fully recovered through dividend by then. The power plant is pledged to the Chinese banks for financing and thus Jaks is unable to pledge its ownership in the power plant for further borrowings. Jaks may be able to get some bank borrowings using its future dividend from the power plant but interest rate may be quite high under such term.

Therefore, Jaks could only raise funds for the 10% optional interest through equity financing but that is all too late now.

Given the stranded situation Jaks is facing now, i think it is quite true that Jaks is giving up on the 10% option.
********************************
It's Compounding

Hi Just88,
IR said Jaks will not take up the additional 10% in JHDP due to unfavorable financing terms and conditions.
How true is this news?

As the power plant is the sole earnings contributor to Jaks currently, Jaks should provide a clear and detail explanation of its decision not to subscribe for the optional 10% interest in the power plant.

This 10% option allows Jaks to acquire additional 10% shareholdings in the power plant at original cost which is equivalent to the investment cost of Jaks' current 30% shareholdings. This option allows Jaks to increase its earnings from the power plant by 33% immediately upon subscription for the remaining 22 years of concession. By letting the option lapse raises the question of bankability of the power plant going forward. Hence, putting the earnings prospect of the current 30% shareholdings in the power plant in doubt.

Not taking up the 10% option is worst than doing equity fund raising to take up the 10% option. This is totally unexpected ! I was wrong to think that RI or PP is the only way to fund the 10% because I never thought that Jaks will let the option lapse ! Initially I thought the worst case scenario is share dilution due to issuance of cheap shares to raise funds. Now Jaks is telling us that the 10% option is not worthy of further investment. DK is totally right about Jaks' difficulty in sourcing fund for the option and RI or PP maybe the only sources of funding. However, I don't think DK had expected Jaks to give up the 10% interest which has a payback period of less than 5 years. I hope it is not another unpleasant surprise. Now we must be honest with ourselves and not just looking for excuses to continue holding on to our investment in Jaks. Something is very wrong with Jaks now.

IR said Jaks will not take up the additional 10% in JHDP due to unfavorable financing terms and conditions. This is certainly a wake up call to all of us. Giving up on a low risk high return investment opportunity due to funding is totally unacceptable. ALP is a smart person and he decided not to take up the option. WHY ?

I have no doubt that Jaks will do more and more PP for the next few years and that is hugely dilutive for retail investors. Jaks IR said no more PP but AGM approved another 10% PP. Jaks has never kept its words. CPO had said no fund raising at low prices. They have no choice but to raise more funds through PP or RI to cover cash shortages. Bank refinancing is getting harder if not impossible for them. My personal opinion is to take advantage of this rally to cut position and buy back later when desirable. Jaks' boss has taken up the remaining PP at 0.18 and has to divest at higher price so as to conserve cash to take up more pp. Doing nothing is not the right solution here. Jaks' liquidity problem is real. It won't just go away because of share price rally.

Jaks has placed out more PP at much lower price of 0.18 and the market is happy with that and moved higher with historic volume. I wonder why such unseen volume is needed just to move a few cents up in share price. The only logical explanation is when you need to siphon out a large number of shares, the underlying transaction volume must be large enough to cover up the disposal. The transaction volume had to be large enough to move the stock into top active list to attract fresh trading players. Jaks has done this many times in the past. Those who have not sold are lucky for now only if you plan to sell just for a few cents more. However, just beware of sudden lost of interest in the stock. The up in share price has not change the underlying liquidity problems Jaks will be facing in the near future. In fact, the continuous PP exercises is a proof of liquidity problems. The latest AGM has approved another 10% PP. This is just my personal opinion.

Don't put hope on the dividend. It is likely to be just a "token of appreciation".

Dividend talk only. Nothing concrete. Dare not announce because TTB does not know how the market will react if the dividend is perceived to be too small. Any sell down will give COL opportunity to collect more.

Why this kind of half baked announcement about dividend policy ? Still haven't found a solution yet ? Or just to stop shareholders from selling to COL ......

KUALA LUMPUR 18 AUGUST 2023: After extensive research, icapital.biz Berhad (5108, ICAP) is to introduce, among other strategies, an innovative dividend policy to ensure that the gap between the fund’s share price and net asset value (NAV) will consistently be auto-remedied moving forward.

DK has recently written an article on Jaks valuation analysis. Only permitted for private sharing. Those interested please PM.

The short loan tenure of JHDP as well as the declining capacity payments of JHDP for the first 10 years are most likely to cause medium term liquidity problems for Jaks. The expected future dividend distributions from JPP are insufficient for repayment of RM500m local bank borrowings of which the majority matures within the next 4 years. Local businesses except the solar farm are unlikely to turn around from losses in the near future. Monetisation of malls may not be easy due to their dire conditions. The bulk of the borrowings were taken by the subsidiaries which house the investment properties including the malls, offices, car park and apartments. These subsidiaries are having negative equities which means their liabilities exceed their assets, thus refinancing of borrowings may prove difficult.

Therefore, Jaks is very likely to face negative cash flow in the foreseeable future until such time the dividend from JHDP increases substantially after its loan is fully repaid in Year 2030. Meantime, in order to address the cash deficiencies, equity fund raising exercises such as private placements and rights issues are convenient ways to raise funds but they are detrimental to the interest of the minority shareholders due to dilution in future earnings per share (EPS).

Downside risks include continuous future equities fund raising exercises to meet cash flow requirements. Any unforeseen or unplanned breakdown of power plant will have significant impact on Jaks’ cash flow especially for the period before the JHDP loans are fully repaid as its dividend from JHDP maybe reduced substantially.

On another note, if CPECC decided to sell its stake in JHDP, Jaks will be forced to dispose its stake. AES recently divested its 1200MW Mong Duong II power plant (costing USD2,100m) and POSCO followed suit citing increased volatility. POSCO’s 30% stake was sold for USD185m. Jaks’ 30% stake in JHDP (costing USD1,870m) should proportionately fetch USD165m (RM723m) equivalent to RM0.316 per share. While this amount is sufficient to pay off its debts, Jaks will have no future source of income except the small 50MW solar farm.

Which is a better strategy ?
1. share buyback
2. declare dividend
3. capital dynamic buying more icap shares from open market

COL is certainly going to buy more until it has enough to overturn the board. What option is left for TTB to defend its cash cow?

Jaks has huge bank borrowings both locally and in Vietnam. High interest rate has very big negative impact on both its financial earnings and cash flow.

https://klse.i3investor.com/web/blog/detail/gotyou/2023-08-10-story-h-242996036-THE_IMPACT_OF_HIGHER_INTEREST_RATE_ON_JAKS_RESOURCES_PROFIT_SHARING_FRO

Dear OTB, I have spoken to DK to welcome you back to DK's group if you are interested. You don't belong to the small new group. Aseng is a dictator. He just removed someone who refused to apologise to him. Other admins dare not add him back. Freedom of speech is only a lie.

The short loan tenure of JHDP as well as the declining capacity payments of JHDP for the first 10 years are most likely to cause medium term liquidity problems for Jaks. The expected future dividend distributions from JPP are insufficient for repayment of RM500m local bank borrowings of which the majority matures within the next 4 years. Local businesses except the solar farm are unlikely to turn around from losses in the near future. Monetisation of malls may not be easy due to their dire conditions. The bulk of the borrowings were taken by the subsidiaries which house the investment properties including the malls, offices, car park and apartments. These subsidiaries are having negative equities which means their liabilities exceed their assets, thus refinancing of borrowings may prove difficult.

Therefore, Jaks is very likely to face negative cash flow in the foreseeable future until such time the dividend from JHDP increases substantially after its loan is fully repaid in Year 2030. Meantime, in order to address the cash deficiencies, equity fund raising exercises such as private placements and rights issues are convenient ways to raise funds but they are detrimental to the interest of the minority shareholders due to dilution in future earnings per share (EPS).

Discounted cash flow (DCF) remains the most appropriate valuation method for Jaks. Local bank borrowings should be included in the DCF model for a more accurate reflection of the future cash flow situation of Jaks.

The valuation stress test shows that, depending on the management’s choice to meet future cash requirements either through equity or refinancing or a combination of both, Jaks is conservatively valued between RM0.21 and RM0.31.

Jaks’ long-term valuation remains above its current market price. Its medium-term liquidity problems are a serious cause of concern. Existing shareholders should closely monitor its liquidity conditions and be prepared for future equity fund raising exercises. Perspective investors are wise to wait and see.

The real danger comes from non stop PP and RI to raise funds to cover negative cash flows in the coming years.

The short loan tenure of JHDP as well as the declining capacity payments of JHDP for the first 10 years are most likely to cause medium term liquidity problems for Jaks. The expected future dividend distributions from JPP are insufficient for repayment of RM500m local bank borrowings of which the majority matures within the next 4 years. Local businesses except the solar farm are unlikely to turn around from losses in the near future. Monetisation of malls may not be easy due to their dire conditions. The bulk of the borrowings were taken by the subsidiaries which house the investment properties including the malls, offices, car park and apartments. These subsidiaries are having negative equities which means their liabilities exceed their assets, thus refinancing of borrowings may prove difficult.

Therefore, Jaks is very likely to face negative cash flow in the foreseeable future until such time the dividend from JHDP increases substantially after its loan is fully repaid in Year 2030. Meantime, in order to address the cash deficiencies, equity fund raising exercises such as private placements and rights issues are convenient ways to raise funds but they are detrimental to the interest of the minority shareholders due to dilution in future earnings per share (EPS).

Discounted cash flow (DCF) remains the most appropriate valuation method for Jaks. Local bank borrowings should be included in the DCF model for a more accurate reflection of the future cash flow situation of Jaks.

The valuation stress test shows that, depending on the management’s choice to meet future cash requirements either through equity or refinancing or a combination of both, Jaks is conservatively valued between RM0.21 and RM0.31.

Jaks’ long-term valuation remains above its current market price. Its medium-term liquidity problems are a serious cause of concern. Existing shareholders should closely monitor its liquidity conditions and be prepared for future equity fund raising exercises. Perspective investors are wise to wait and see.

On another note, if CPECC decided to sell its stake in JHDP, Jaks will be forced to dispose its stake. AES recently divested its 1200MW Mong Duong II power plant (costing USD2,100m) and POSCO followed suit citing increased volatility. POSCO’s 30% stake was sold for USD185m. Jaks’ 30% stake in JHDP (costing USD1,870m) should proportionately fetch USD165m (RM723m) equivalent to RM0.316 per share. While this amount is sufficient to pay off its debts, Jaks will have no future source of income except the small 50MW solar farm.

Downside risks include continuous future equities fund raising exercises to meet cash flow requirements. Any unforeseen or unplanned breakdown of power plant will have significant impact on Jaks’ cash flow especially for the period before the JHDP loans are fully repaid as its dividend from JHDP maybe reduced substantially.

Didn't listen to DK's advice now cry father cry mother blame him blame her. Now still don't want to listen.

ALP continued to get his free shares and nothing for you.

By then Jaks is still alive but you are already dead

YES, Jaks' money problems can be solved but only with your money. You need to put in more and more money to solve the problems.

You did not listen to DK more than 2 years ago and that is where you are now. Now, you don't listen again. Don't blame me later.

Jaks will be facing big cash shortfalls in the coming years when more and more bank borrowings mature. There will be more PP/RI from now until the JHDP loan is fully settled in year 2030. By then, the share base (NOSH) would have doubled !

This article should be taken seriously. Jaks' management are not trust worthy !

https://klse.i3investor.com/web/blog/detail/TimelessInvestment/2023-07-10-story-h-246424046-JAKS_Resources_Berhad

Gotyou, DK added you.

Gotyou, if you like you may join DK's group. DK is open minded and is serious about freedom of speech and expression of opinions as long as supported by credible arguments. I'm a good example. After I was removed by Aseng for expressing negative opinions, DK took me back into the group knowing his long time ally, Aseng, will not be happy. However, you need to make a formal request to join DK's group. DK's group has not taken in any new member for the last few years. I will speak with DK if you are interested.

Gotyou
Aseng, I withdraw my request to join. I understand that my position contradicts the interest of the group. ------------------ Trust me, you don't want to join the group. You articles have created havoc to them. You will be torn into pieces in the group. I was thrown out by Aseng because I agreed to your articles. Anyway, why you want to join the group ?

88surewin88 is a new ID created by Aseng

You were not removed by DK because of me. You were removed after I was added back by DK and you were unhappy and started cursing DK. Why you keep lying ? All the donations you made also fake ? Why you call yourself a buddhist ?

Isn't that why I was removed by you in the first place ? You can't accept opposing views !

Prove that your group has balanced view !

Why can't you be honest for once !

Don't talk rubbish about balanced view from both sides. Dare not accept Gotyou into your group because his opposing views will scare away all your members and you have to remove Gotyou later. Waiting list for membership is quite extensive ? Still lying and none stop lying to save face.

OMG ! this is the Aseng's group you people want to join ? listening to this kind of rubbish ??

You dreamed to be a king but in reality you are just a beggar, Aseng the beggar begging everyone to join his group.

Aseng, ask you friends who still remain inside the group how many has left the group. You think they will leave DK for you? fat hope ! You know nothing but begging. Now people start to speak up because they don't need to fear you now.

itudia joined i3 in 2015. You think I created this ID 8 years ago just for today? Making everyone my shadow so that you appear to have less enemies ?