MFCB : 4.50
JAKS : 0.77

........

Is MFCB earnings expected to be 5-6 x times higher than JAKS future earnings?

OR

Is JAKS earnings expected to be 5-6 x times less than MFCB earnings?

Looking at above news, it seems to me now there is some truth in what uncle Koon was saying earlier:

https://klse.i3investor.com/blogs/koonyewyinblog/2020-03-18-story-h1484897539-Dayang_The_worst_is_over_Koon_Yew_Yin.jsp

How does the oil price slump affect Dayang?

Many investors are worried that the current oil price slump will badly affect Dayang’s business and reduce Dayang’s profit. No! it will not! In fact, the oil price slump is good for Dayang’s business. Unlike Hibiscus, Dayang is not involved in the oil extraction. It is only oil rig maintenance contractor.

In fact, when the oil price slumps, Petronas will have to pump more oil to support Malaysia’s economy and award more oil rig maintenance contracts to Dayang which is largest and most efficient contractor in the field. In this region where Petronas has about 100 Offshore oil rigs, it looks like Dayang has the monopoly in this business

Fitch expects Petronas capex to remain around RM50b a year

Thursday, 19 Sep 2019

https://www.thestar.com.my/business/business-news/2019/09/19/fitch-expects-petronas-capex-to-remain-around-rm50b-a-year

In said in a statement on Thursday Petronas expects upstream investments of RM167.6bil over the next five years.

“These investments are critical for the company to arrest falling production at its domestic oil and gas fields and drive growth overseas, ” it said.

Petronas knows eventually price will return to 40-60 US$/brl.

They will never stop any of their scheduled maintenance activities due to a temporary blip on oil price.

They have a duty to ensure money flows into the Malaysian economy this way via the downstream players (directly to the economy) on top of contributing to Government revenue which eventually goes as government expenditures (indirectly to the economy).

The Myth Of Cheap Shale Oil

By Nick Cunningham - May 22, 2019,

https://oilprice.com/Energy/Crude-Oil/The-Myth-Of-Cheap-Shale-Oil.html

According to the Federal Reserve Bank of Dallas, the breakeven prices for producing oil in the Delaware Basin is $49 per barrel and $48 per barrel in the Midland Basin, both of which are in the Permian. Meanwhile, what the Dallas Fed classifies as “other U.S. nonshale” has a breakeven of $49 per barrel. So, despite all the hype, shale is not more competitive on a cost basis than conventional and offshore production.

While shale may have roughly a similar breakeven price as other conventional sources of oil in the U.S., the massive wave of shale output has succeeded in lowering oil prices more broadly. More importantly, because the breakeven price of shale tends to hover between $40 and $60, a much larger volume of oil can come online when prices rise to the upper end of that range. It used to be the case that it would take triple-digit oil prices in order to induce more supply.

Another implication is that long-dated oil futures prices are likely to be correlated with these breakeven thresholds. In theory, though not in practice, long-term oil prices should be anchored to the marginal cost of supply. Because shale increasingly accounts for that marginal barrel – more supply comes online when prices rise to the roughly $50-$60 range – U.S. shale could keep a lid on prices for years to come, the Dallas Fed argues.

Similarly, the fast-depleting nature of shale ensures that prices can’t fall too low.
...................


As soon as crude prices fall below the breakevens price for shale operators, drilling stops and existing wells quickly deplete, knocking supply offline. That firms up the price.

Post removed.Why?

Dayang Enterprise Holdings Bhd

(Feb 24,2020 RM2.69)

https://www.theedgemarkets.com/article/higher-demand-mcm-marine-vessels-seen-benefit-dayang

Upgrade to outperform with a higher target price of RM3.40: Dayang Enterprise Holdings Bhd posted a record profit for the financial year ended Dec 31, 2019 (FY19), beating expectations, thanks to higher work orders received for its offshore TMS, as well as higher vessel utilisations for its marine charter.

Moving forward, Petroliam Nasional Bhd (Petronas) is still looking to increase its demand for maintenance construction and modification (MCM) and marine vessels — both of which will benefit Dayang. Additionally, its reduced debt following the conclusion of its debt restructuring and improving earnings could also lead to further finance cost-savings.

Dayang posted FY19 core net profit of RM215.1 million (arrived at after stripping off non-core items, for example, unrealised foreign exchange, gain on purchases and a reversal of accrued interests) — coming above our forecasts by 26%, and consensus by 5%, thanks to higher work orders for its offshore TMS and stronger vessel utilisation in its marine charter division. No dividends were announced, as expected.

In its latest activity outlook, Petronas has guided for a further increase in demand for its MCM and marine vessels — both of which are segments that will benefit Dayang. Additionally, on the back of its outlook recovery and recently concluded debt restructuring, Dayang’s total debt was reduced by 25% (or RM277 million) year-on-year, which would result in further finance
cost-savings.

We also raised our estimated FY20E’s core net profit by 11%, after factoring in stronger work orders and vessel utilisations, while introducing new FY21E numbers. Besides, risks to our call are weaker-than-expected work orders, poorer-than-expected margins, and a lower-than-expected vessel utilisation. — Kenanga Research, Feb 24

..............

not even 1 month from above date, dayang had dropped 4 x times lower

may be like KYY said, Petronas should increase oil production to recover more revenue for the government....

at such cheap oil, their low sulphur content would have an advantage considering the IMO 2020 regulations....

it may be more economical for vessel owners to just buy cheaper low sulphur oil than installing scrubbers (expensive capex) to meet the IMO 2020 regulations.

Further, at current oil price Saudi Arabia will go bankrupt in 4 years.

I admit i was wrong in terms of containing the cases within China only (they did contain it) - the error was thinking it will not spread to countries and areas which has poor controls like in Malaysia

now that is has spread - we need extreme precautionary actions enforced

Post removed.Why?

so the moment you see 'anyone' not cooperating...including religious group...please report to police immediately.

Call: 03-8886 8110, 03-8886 8126

Remember - you are doing this for the survival of your senior loved ones.

so the moment you see 'anyone' not cooperating...including religious group...please report to police immediately.

Call: 03-8886 8110, 03-8886 8126

Remember - you are doing this for the survival of your senior loved ones.

guys...its really easy to beat the virus. The prescription is only 3 tablets below:

Tablet 1: Space
..............

Keep distance of 2 meters. Stay at home - only go out for essential shopping.

Tablet 2: Time
...............

Take the tablet 1 above for 14 days. In 14 days those who were infected either gets cured / died and will no longer be able to transmit.

Table 3: Cooperation - "simultaneous action by all"
.....................

Taking above tablet 1 & 2 by yourself alone will not wipe out the virus if others do not do it at the same time. Tablet 1 is easy to take...Tablet 2 requires a lot of patience...

Tablet 3 is the hardest pill to swallow and it has to be forcefully fed by the Government....this is the greatest battle.

......................

Tablet 3 availability explains the difference between China and other countries..

guys...its really easy to beat the virus. The prescription is only 3 tablets below:

Tablet 1: Space
..............

Keep distance of 2 meters. Stay at home - only go out for essential shopping.

Tablet 2: Time
...............

Take the tablet 1 above for 14 days. In 14 days those who were infected either gets cured / died and will no longer be able to transmit.

Table 3: Cooperation - "simultaneous action by all"
.....................

Taking above tablet 1 & 2 by yourself alone will not wipe out the virus if others do not do it at the same time. Tablet 1 is easy to take...Tablet 2 requires a lot of patience...

Tablet 3 is the hardest pill to swallow and it has to be forcefully fed by the Government....this is the greatest battle.

......................

Tablet 3 availability explains the difference between China and other countries..

A good simulation showing how social distancing helps significantly in halting the virus and flattening the spread curve:

https://www.washingtonpost.com/graphics/2020/world/corona-simulator/

A good simulation showing how social distancing helps significantly in breaking the chain like sslee said above:

https://www.washingtonpost.com/graphics/2020/world/corona-simulator/

yes..it was a subset all the while based on medical facilities availability...the major constraints is the ventilators..you remove this from the equation you have different fatality rates...

that is the reason they want to 'flatten the spread curve'..so that medical facilities can handle the cases

outside wuhan in china it is still 0.2%....the high rates you see in Europe is because 22% of europe population are seniors aged above 65.

99% of of those who died are senior people having some health issues earlier

i am surprised an educated man like you can say such a thing....not sad specifically on you...but sad for the many clueless educated malaysians like you


Posted by Ricky Yeo > Mar 20, 2020 2:05 PM | Report Abuse

Thanks for being sad to me

if you care for the senior members of your family...please do your part....aged population are highly vulnerable

they will never (never) be able to freely roam around until the vaccine is found
.............

please understand the deep message above

Posted by Ricky Yeo > Mar 20, 2020 12:02 PM | Report Abuse

I dont really see anything wrong with this. Not like you're group jogging, or spraying COVID into the air or touching the trees while you jog so someone touches it later gets infected. I agree gym is bad but outside jogging as long alone and social distancing is still fine. And also consider the consequences of entire nation of no exercise for 2 weeks, how much death can be attributed to that? That's an invisible risk.

........

sad educated malaysians...

Time to come down hard on selfish, clueless Malaysians

https://www.thestar.com.my/opinion/columnists/the-bitter-truth/2020/03/20/time-to-come-down-hard-on-selfish-clueless-malaysians


The government has been under a lot of criticism over its handling of the movement control order (MCO) meant to curb the spread of the Covid 19 pandemic.

This is a newly minted government seeking legitimacy from 60% of the electorate, following the collapse of the Pakatan Harapan Government at the end of February.

While some may argue that time should be given to this government to sort itself out – since Covid 19 escalated in the same week as the power grab was happening – there is also the opinion that the new administration consists of veteran ministers who should be better equipped at responding to a national crisis.

However, while Tan Sri Muhyiddin Yassin’s government sorts itself out and lubricates its administrative wheels, perhaps its critics should take a breather and ask if we are doing our part to help to flatten the curve in arresting the pandemic.


It's obvious from the days leading to the MCO and the first day of its enforcement that Malaysians are a stubborn and disobedient lot.

This was evident from the panic buying (what are you going to do with a year’s supply of instant noodles and toilet paper) to happily driving aimlessly about town to see the latest tourist attraction – empty city streets – and eating packed foods seated at tables in restaurants and food courts.

Datuk Seri Ismail Sabri Yaakob, the Defence Minister and coordinator of the MCO, had warned that if the level of disobedience to the controlled movement remained at a 60-70% of non-adherence, there would be no choice but to bring in the military to complement efforts by police and Rela to chase loiterers home.

Well, the order has now been issued for the army to assist the police with enforcement on March 22.

Large numbers of Malaysians have been taking things easy and either have no understanding or refuse to comprehend the grave situation we are in.

Two people have died – a Muslim tabligh attendee and a Christian pastor. These are two deaths too many.

The Prime Minister and his ministers have tried in complex, as well as simple, terms to advise Malaysians from multiple socio-economic backgrounds to adhere to the MCO.

Celebrities like Azwan Ali @ Diva AA – the brother of Minister of International Trade and Industry Datuk Seri Azmin Ali – was more direct, scolding with choice words Malaysians who horde and sabotage the government’s efforts.

Sometimes, you need to speak to people in language only they can understand.

The coronavirus is billed as the largest threat to human existence since the bubonic plague and Spanish flu. But as has been proven in Wuhan, stringent enforcement of lockdowns and a disciplined populace can arrest the spread of the virus.

Wuhan, the epicenter of the virus, recorded its first zero new infections in 14 days.

In Italy, the second worst country after China, swift reaction by authorities in tiny towns such as Codongo, which were in total lockdown with military-style enforcement have managed to stem the increase in Covid-99 infections.

Many countries hit by Covid-19 are seeing improvements after lockdowns and MCOs of an average of three weeks. So such measures work. Social distancing works. Isolation works. Quarantine works.

Malaysia can get through this if we just abide by the regulations. Unfortunately, we are masters at bending and breaking the rules.

What can the authorities expect from a society that litters, park illegally, mess up public toilets and dine along pedestrian walkways and road kerbs?

Does Foreign Affairs Minister Datuk Seri Hishammuddin Hussein truly believe that the 83 Malaysians returning from the cancelled mass tabligh gathering in Indonesia will voluntarily self-quarantine?

The language used and approach by our government has been too soft. Understandably, this was done to maintain calm.

However, Malaysians are our own worst enemies and the authorities have no choice but to bring out the rotan to ensure that the country does not self-destruct due to the actions of the selfish, the stubborn and the stupid.
...........

lol!

Posted by Zuliana > Mar 20, 2020 1:21 PM | Report Abuse

Stop kentut. Kentut releases billion of Covid virus.
Covid also found in shit in the big intestine woh!

id a doctor can be such an idiot..i can imagine how a person with 'kentut' title be...

Post removed.Why?

if you dont know the MCO...just ask politely...and then follow...the enforcers have big task to do....just help them to implement it easily...

just cooperate la...in wuhan any doctor got jog or not? only got doctor sacrificed himself for others...

malaysians are seriously stupid

agree with rr88

Market will soon start treating JAKS as a foreign USD stock

who knows 1 USD = MYR 5 soon...

well said i3lurker

ha ha @huahtai what you said is true:

From mild to wild: Coronavirus impact on China’s power and renewables sector

https://ihsmarkit.com/research-analysis/from-mild-to-wild-coronavirus-impact-on-chinas-power--renewabl.html

Base case: Electricity demand only moderatedly affected
.......................................................


The sector most impacted during the current outbreak is the commercial sector, e.g., restaurants, hotels, shops. These are lost activities that will not be re-generated during rest of the year, for example, Chinese New Year holiday trips, family banquets at restaurants. However, because these businesses only account for 14% of electricity demand, their impact on total power consumption - especially if only limited to the first quarter - will be moderate.

In addition, as people are advised to stay home during this period, we expect an increase in household electricity consumption from activities such as cooking and heating.

As a result, in our base case outlook, IHS Markit expects China's electricity demand to still increase by 3.8% in 2020.


"Severe Impact" case: Electricity demand 1% lower than previous forecast
.........................................................

However, should the government not effectively contain the spread of COVID-19 and the disease control measures extend further in 2020, the impact on the Chinese economy - and the electric power and its related sectors - will be much more pronounced.

Under such an assumption - or the IHS Markit "severe impact" case - China's GDP growth during 2020 decelerates to only 4.2%, and the associated electricity demand growth will be only 3.1%, a full percentage point lower than our pre-COVID-19 outlook.

..........

The above article came on 19th Feb and the peak of spread in China....only 1% effect max under extreme scenario!

For Vietnam who will be compensating for the vacuum created by the Europeans, even if the cases there rise - the net effect is still rise in electricity consumption.

Thats tibet monk raider's quote. How does it fit here?

Posted by gohkimhock > Mar 14, 2020 4:58 PM | Report Abuse

Heng Yuan = Nestle ??

@hng33, i totally agree with you on the above 2 statements (though i dont consider you a person with integrity.

Note that i am working for an engineering & service oriented company in a region quite affected by the covid-19.

Customers are hesitant and truly holding-delaying on service activities and going through tedious medical screening before allowing our service engineer to work at site.

They are checking their passport for travel history on the last 30 days. If covid presist, my guess is Dayang will have reduced activity.

Though its selling at an extremely attractive price, at this stage i am not willing to risk it for something more assuring like the utility business with 'capacity payments' for 25 years.

@GKH, your OKA will definitely break 80 cents again - since no one is conning and duping and promoting.

corrected interpretation:

Incase any layman does not understand the above, let me explain:
...............................................................

The "agreed heat rate" of 9795 BTU per kWh in 2016 means that if the Mong Duong power plant produced say 10 Million Kwh of electricity in 2016, EVN will assume that the plant had consumed Coal equivalent to:

= (9795 BTU/1kWh) * (10M kWh)
= 97,950 Million BTU

1 ton Coal has 20 Million BTU, as such EVN will pay for:

= (97,950/ 20)
= 4,900 ton Coal at its cost
...............

Now, for Mong Duong plant to really consume 4,900 ton coal to produce 10 Million kWh, the plant has to be operating at 34% efficiency. Will show you here, how to derive that:

From above we can see that 4,900 ton coal produces 97,950 Million BTU.
BTU is just unit for energy and it can be converted to kWh with the conversion factor of 3412 BTU per 1 kWh.

As such, the 97,950M BTU is equivalent to 28.7M kWh.
But the plant only produced 10M kWh right?

So the efficiency of the plant is:
= 10M kWh energy produced /28.7 kWh energy consumed
= 34.8% efficiency
.................

So, as DK66 mentioned above, any actual efficiency of the new Chinese thermal plant (e.g Hai Duong) higher than 34.8% presents a lesser actual coal consumption than the theoretical quota EVN had agreed with Mong Duong 2...

DK66 showed Hai Duong thermal power plant having the Chinese thermal power plant efficiency of 43% , represents fuel cost savings of 24.4% (from revenue of USD 343M) which will result as pure savings or additional profits of US$ 84M to Hai Duong power plant relative to Mong Duong 2 power plant.

Really? thats the first ever good news of 2020!!

Beary, though i dont admit i agree with all your statements, i must admit you are an intelligent forumer that i3 needs.

Intelligent Devil's advocate are always appreciated. hahaha...

TQ

Posted by Beary > Mar 14, 2020 12:25 PM | Report Abuse

There is a possibility that the price push up yesterday was by the oldman after sensing otb has abandoned ship.

You all know what a nasty and vengeful person the oldman is.

Oldman is the type who will cut his nose to spite his face.

mechanism for the numbers derivation cannot be 'lied'....trust the logic behind it.

trust logics - not hearsay

beary, focus on the numbers man...why people...

"people may lie..but numbers dont"

IPP return is real, even if it is not utilized as for the case of Indonesian Coal Fired power plant under BOT contract:

http://ieefa.org/wp-content/uploads/2017/08/Overpaid-and-Underutilized_How-Capacity-Payments-to-Coal-Fired-Power-Plants-Could-Lock-Indonesia-into-a-High-Cost-Electricity-Future-_August2017.pdf


Extract from Page 12 - 13 below:
....

To this end, IPP participation has been instrumental in expanding power generation capacity in Indonesia, although this expansion has been accomplished at a significant cost.

The PPA with Paiton Energy (which operates a 2,035MW coal-fired power plant) in 1991 has a project internal rate of return (IRR) of between 20% and 25%.

Later coal power projects, those that achieved financial close from 2005 to 2009, such as Cirebon (660MW) and the Tanjung Jati expansion (2 x 660MW) have IRRs of between 12% and 14%.

In general, equity return for investors is higher than project IRR. The Indonesian government effectively guaranteed this return through capacity payment. The high IRR attained in earlier years was commensurate with the political and commercial risk of investing in Indonesia, but the track record shows how much Indonesia has had to pay in order to kick-start and sustain the IPP momentum

@OTB you are right, at 7238 hrs utilization rate , the IRR will shoot to 15%, mid teens like the management had guided Public Investment Bank earlier in 2017.

.........................

Source Public Investment Bank Berhad, January 10 2017.

Jaks, together with CPECC, is constructing a BOT power plant, with an estimated cost of US$1.87bn with 25 years’ concession and power purchase agreement with Viet Nam Electricity (EVN). US$1.4bn already secured back in September 2015 from Industrial and Commercial Bank of China, China Construction Bank Corporation and Export-Import Bank of China. The JV has US$160m capital (equity portion) and expects the remaining balance of US$307.1m to be injected in the next 3 years. Management expects strong IRR in the mid-teens with the first unit expected to be completed by mid-2020, and the second unit 6 months later.”

correct my post above - use Page 66.

......

The cash outflow of US$ 1.87 Billion during EPCC phase (first 4-5 years) before COD can be proportional split as per the table shown on above page 66.

@DK66, actually you can also derive the exact numbers above using the project IRR of 12% guided by the management.

Perhaps on your next article you can do just that. Ensure that the first recurring cash in flow (25 years) happens approximately on the 4th or 5th year from the project initial out flow of cash being year zero.

Refer 'Economic-cost benefit analysis' on Page 63-64 below for Mong Duong 1 as a guide how the cash out flow & in flow takes place in sequence through the years - of the thermal power plant's economic life.

"Viet Nam: Mong Duong 1 Thermal Power Project"

https://www.adb.org/sites/default/files/project-documents/39595/39595-013-pcr-en.pdf

The cash outflow of US$ 1.87 Billion during EPCC phase (first 4-5 years) before COD can be proportional split as per the table shown on above pages.

...........................

You will realize the payback with this cash flow is also 8 years as per management guidance.

Perhaps that will clear market skepticism on JAKS power plant earnings once and for all this way.

TQ

Hope they realize...

there is no other investment in the whole of Bursa can provide earnings certainty like JAKS - capacity payment even without power dispatch! (not saying they wont sell cos electricity consumption rose 11% this qtr in Vietnam).

Wish the price overtakes Dayang soon...as all outdoor activities & services will have an impact - due to covid restriction strategies worlwide...




Posted by SarifahSelinder > Mar 13, 2020 3:51 PM | Report Abuse

Sarifah hope weaker hands dah cabut lari hv bin replaced by dana insituisi

fcuk Dayang...with covid all outdoor activities will be highly restricted...


Posted by deMusangking > Mar 13, 2020 3:18 PM | Report Abuse

yes!
dayang alredi green!

Its truly one of the safest investment JAKS had got into.

The Project IRR is expected to be mid teens.
............................................

The above is no bullshit & the plant is real.

Dont react based on price movement, TA or what sifus say..
use your own head - think and decide.

Extract from above link page 5 below:
....................................

Under PLN’s procurement guidelines, PPAs signed between PLN and IPPs of thermal power plants are for fixed terms of approximately 25 years, or for a maximum of 30 years after Commercial Operation Date (COD).

Capacity payment, as part of the tariff, is a fixed payment calculated
based on the installed capacity of the power plant with specific availability factor agreed to by an IPP and PLN. It is paid for each kilowatt of available (not necessarily dispatched) capacity.

Specifically, it covers:


I. Repayment of the principal and interest of the debt used to construct the power plant, usually on a non-recourse basis;

II. Return on equity invested by project sponsors; and

III. Fixed operation and maintenance (O&M) costs that are independent of the amount of energy generated (e.g., staffing costs, administrative expenses, operator fee, insurance premiums, etc.). The first two components are paid to IPPs as part of capital recovery charges. Variable components of the tariffs, based on power dispatched, contain:

I. Energy Charge Rate, or fuel cost, which is usually a pass-through cost in that PLN bears it;

II. Variable O&M Cost Recovery Charge Rate.

IPP return is real, even if it is not utilized as for the case of Indonesian Coal Fired power plant:

http://ieefa.org/wp-content/uploads/2017/08/Overpaid-and-Underutilized_How-Capacity-Payments-to-Coal-Fired-Power-Plants-Could-Lock-Indonesia-into-a-High-Cost-Electricity-Future-_August2017.pdf


Extract from Page 12 - 13 below:
....

To this end, IPP participation has been instrumental in expanding power generation capacity in Indonesia, although this expansion has been accomplished at a significant cost.

The PPA with Paiton Energy (which operates a 2,035MW coal-fired power plant) in 1991 has a project internal rate of return (IRR) of between 20% and 25%.

Later coal power projects, those that achieved financial close from 2005 to 2009, such as Cirebon (660MW) and the Tanjung Jati expansion (2 x 660MW) have IRRs of between 12% and 14%.

In general, equity return for investors is higher than project IRR. The Indonesian government effectively guaranteed this return through capacity payment. The high IRR attained in earlier years was commensurate with the political and commercial risk of investing in Indonesia, but the track record shows how much Indonesia has had to pay in order to kick-start and sustain the IPP momentum

Many options to ensure electricity for the dry season

12/03/2020

http://icon.com.vn/vn-s83-161192-637/Nhieu-phuong-an-dam-bao-dien-cho-mua-kho.aspx

Summer 2020 peak forecast that electricity supply in the North will be extremely difficult due to high load, new power projects cannot be used, additional power is negligible while hydrological situation. hydroelectric lakes continue to be unfavorable ...

To ensure the supply of electricity in the dry season 2020, EVNNPC will focus on energizing new TBA projects, projects to increase capacity, install T2 transformers in areas especially high-load areas such as Hai Duong, Thai Binh, Nam Dinh, Vinh Phuc and Bac Ninh are expected to be completed before the second quarter of 2020.

Northern commercial electricity in February increased by 11.04%

12/03/2020

http://icon.com.vn/vn-s83-161089-621/Dien-thuong-pham-mien-Bac-thang-2-tang-1104.aspx

Northern Power Corporation (EVNNPC) said that in February, despite being affected by the disease, the demand for electricity still increased by 11.04% compared to the same period in 2019

Information 6
..............

with reference to information 3 above (which talks on Vinh Tan 1)

Hai Duong power plant is higher spec then Vinh Tan 1 power plant. Performance can be better than Vinh Tan power plant which had proven Output of 8,149 billion kwh, 7,238 utilization hours


IRR of JAKS will be 15% at 7238 hrs since Management said 12% at 6500 hrs.