150M subsidized profit at 600M shares....

That is an EPS 5 cents per qtr at a very distant uncertain future....not sexy at all.


Posted by Icon8888 > Apr 13, 2019 11:03 PM | Report Abuse

I don't worry too much about dividend from Jaks

It won't be equivalent to profit, but will not be zero either

The FCF is definitely less than 150 mil, because 25 years depreciation will now be replaced by 15 years (let's say) principal repayment

You can actually make some assumptions and work out your own figures

At the end of the day, you don't need very high dividend payment. Let's say based on 600 mil shares and price of RM2.00, market cap is RM1.2 bil

Post removed.Why?

cheoky, thanks for your sharings earlier on the difference between MFCB and JAKS...it made me discover a big skeleton hidden - the cost of coal per kWh.

Vietnam needs just one, not 26 coal power plants

https://e.vnexpress.net/news/business/vietnam-needs-just-one-not-26-coal-power-plants-3759808.html


At a conference on energy conservation held in Hanoi on Tuesday, they said that the coal power plants were not needed to sustain the national grid.

Vietnam is currently planning to build 26 additional coal power plants after 2020.

However, the Green Innovation and Development Center (GreenID) said that as many 25 of these were not required.

By removing these 25 plants, which have a targeted annual output of 30 Gigawatts (GW), Vietnam can cut down the ratio of power generated for the national grid by coal from 42.6 to 24.4 percent.

This would help reduce the use of an environmentally unfriendly source, the center said.

Vietnam would also save $7 billion it would have to spend on importing approximately 70 million tons of coal, and reduce its carbon dioxide emissions by 116 million tons, each year, it added.

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

that comes about 100 USD / ton of coal not far from used 115 USD/ton (considering current status, exchange rates)

Icon, i really wanted to buy - because if they can make same profit margin like MFCB hydropower plant does....JAKS is super attractive.

BUT, as attractive is it is...there is equal or if not greater danger seems clearly lurking.

I want to brainstorm / scrutinize to see if Jaks is truly a gem.

Ignore me personally and try to provide counter arguments to dispute the adverse possibilities i may present.



Posted by Icon8888 > Apr 13, 2019 8:29 PM | Report Abuse

probability you have Jaks also ?

https://www.export.gov/article?id=Vietnam-Power-Generation

Encouragement and Challenges

The Government of Vietnam’s policies are to diversify investment sources, encourage foreign investors in power development with BOT, BOO, and PPP. However, Vietnam faces several challenges; electricity prices are still low, existing thermal power plants are unable to buy coal at an economical price, leading to unattractiveness of new power plant projects. The procedures for investors under BOT arrangements are still complicated with insufficient guidelines and equipment prices have increased, leading to increased production costs which reduces the financial attraction of power generation projects.

DK66, Will discuss if i find some interesting factual info being shared here to justify better valuation of Jaks. Thanks for the generous sharings...

Guys, after monday stop promoting on this counter with vague information based on profit figures given by management..seemingly plucked from the air

Question is from where are they getting this 150M..subsidized? The maths using available data shows there is no room for such margins

There are news on standardization of all electric tariff across Vietnam.

In that case, i would rather invest in MFCB if i am certain Jaks will make profit...

isn't then MFCB (hydropower) leveraged by the Jaks (Thermalpower)?

I wished they could pass through 0.047 USD per kWJh (cost of the coal)...

That is the million dollar question now....and was on my last derivation.

Coal contains moisture. When coal burns the moisture in coal evaporates taking away some heat of combustion which is not available for our use.

This is the reason for difference in quality of coal. i.e calorific value.

The reason for 15,000 ton coal per day consumption reported on Vietnam study trip with a 1370 kWh/ton as derived by DK66 is probably due to the quality of coal used as shown by Sslee ranging from 10,500 kJ/kg to 25,000 kJ/kg.

That means the coal cost per kWh is much higher than the high grade coal used at 2460 kWh/ton. The new cost of coal per kWh would then be:

= (2460/1370) x (0.047 USD/kWh) derived from (2) earlier
= 0.084 USD/kWh

this is already coming close to the kWh end selling price to household
..............................................................

Its likely that these low grade coal is cheaper than what had been reported on their Customs Department at VND2.6 million per ton.

But the overall derivations earlier cant be far out.

MFCB uses hydropower as the energy source, but for JAKS it is Coal. Their end product kWh is the same. There is a significant cost difference between the two...one is free the other at 0.047 USD/kWh.

Posted by Travestor > Apr 13, 2019 2:20 PM | Report Abuse

Saying that (2) will wipe out net profit margin of (3) doesn't make sense to me. (3) is an estimation of MFCB's net profit. So, (3) has already net off whatever cost to produce the electricity for MFCB. Or am I missing something. Please enlighten. TQ.

YES thats why CALVIN TAN eyeing malaysia...

Posted by trapped > Apr 13, 2019 10:37 AM | Report Abuse

ECRL bad for S'pore?

Post removed.Why?

https://oxfordbusinessgroup.com/news/malaysia-moves-boost-port-capacity

Increasing connectivity

Improvements to the nation’s ports will serve as bookends for the RM55bn ($12.3bn) East Coat Rail Line (ECRL) – a 620-km electrified rail link between Kuantan Port and Port Klang. At the beginning of November, Malaysia and China signed an engineering, procurement and construction contract for the project.

The ECRL will allow for the rapid trans-shipment of freight across the peninsula, reducing shipping congestion in the Malacca Strait, which hosts up to 80% of China’s maritime trade.

Significantly, the new land-sea link will bypass Singapore and move a major portion of regional freighting activity north. This could boost Malaysia’s profile as a leading logistics hub and open up new routes to markets in North Asia. Work on the ECRL is set to begin later this year and be completed in 2022.

MMCCORP

https://www.mmc.com.my/MMC%20Annual%20Report%202017%20small%20file%20size.pdf

Based on the original plans, 44 tunnels are to be constructed at various locations spanning over 50km. The longest tunnel (which is now likely to be scrapped) is the Genting Tunnel measuring 17.8km (37% of total tunnel length).


The ECRL is of strategic importance to China because the Kuantan Port-ECRL-Port Klang route shortens its trading route and cuts the time it takes to travel to the west of Peninsular Malaysia while eliminating the need to use the Singapore Port.

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

the max reduction from its original tunnel volumes is 37% only, but more importantly it benefits MMC Corp's Port & Logistics division.

you syphon out trades directly from China instead of getting via Singapore Port route

yup RM 1

Post removed.Why?

Hi Sslee,

your figures above considering the overall conversion efficiency of energy are absolutely inline with the basis used of 2460 kWh/ton coal.

Note 1 kWh = 3600 kJ

the big bugging point is as per below which i will present soon:

https://oxfordbusinessgroup.com/news/malaysia-moves-boost-port-capacity

Increasing connectivity

Improvements to the nation’s ports will serve as bookends for the RM55bn ($12.3bn) East Coat Rail Line (ECRL) – a 620-km electrified rail link between Kuantan Port and Port Klang. At the beginning of November, Malaysia and China signed an engineering, procurement and construction contract for the project.

The ECRL will allow for the rapid trans-shipment of freight across the peninsula, reducing shipping congestion in the Malacca Strait, which hosts up to 80% of China’s maritime trade.

Significantly, the new land-sea link will bypass Singapore and move a major portion of regional freighting activity north. This could boost Malaysia’s profile as a leading logistics hub and open up new routes to markets in North Asia. Work on the ECRL is set to begin later this year and be completed in 2022.

Post removed.Why?

Malaysia’s ports to be enhanced with China’s cooperation, says Liow

Published 1 year ago on 04 September 2017

https://www.malaymail.com/news/malaysia/2017/09/04/malaysias-ports-to-be-enhanced-with-chinas-cooperation/1457475

aiyo dragon....please update your profile with email address...i think this Shahril would have surely contacted you earlier for advise on judi short term...kiki

you missed plenty of opportunities all this while for consulting service....wakakaka

may be we can look at this way...

JAKS would incur 46,800 USD additional cost (due to Coal usage) compared to MFCB for every 1 Million kWh supplied to its consumers.

That would be the best conservative estimation on it profit using MFCB profits data currently and incorporating difference in their debt structure.

not sure what would the number be...but will definitely be interesting to find out

Considering interest, administration and other variable operating costs plus the commissions to government on kWh tariffs (should be right?)....

Net profit may come very much lower
..................................

30% of 240M USD is max 80 Million USD per annum

WITHOUT - any other costs incorporated in it
.......

what is the stakes of Jaks on the Power plant - they only get 30% is it? or is it 50%?

DK66, let me know if i had missed anything - any correction you see on my calculation

For a 7.5 Billion kWh per annum power plant (as per DK66 derivation at 77% utilization), your minimum coal consumption would be:

= 7,500,000,000 kWh/ (2460 kWh/ton)
= 3 million tons coal per annum

Gross profit max = 240 Million USD per annum

so the estimation by the banker ( 120 M net profit) perhaps makes sense

Price of coal= 115 USD/ton

Price of electricity = 0.08 USD/KwH

Electricity generated per ton of coal (max) = 2,460 kWh/ton

2460 kWh = 196 USD

Meaning you create about 196 USD dollar (max consumer value) per 115 USD coal you consume

Max gross margin (excluding all other costs) = 80 USD / ton of coal


https://science.howstuffworks.com/environmental/energy/question481.htm

A typical 500 megawatt coal power plant produces 3.5 billion kWh per year. That is enough energy for 4 million of our light bulbs to operate year round. To produce this amount of electrical energy, the plant burns 1.43 million tons of coal.

ok thanks DK66 will revert to you on the coal to kwh conversion soon..

DK66 do you have the tariff rates per KWH power in Vietnam?

Post removed.Why?

https://www.hellenicshippingnews.com/vietnam-exports-coal-to-china-then-imports-coal-from-china-at-high-prices/

By the end of July 2018, Vietnam had imported 11.9 million tons of coal worth $1.4 billion. The average import turnover was VND2.6 million per ton.

While Vietnam could buy coal from Indonesia at VND1.6 million per ton, it had to pay VND8.2 million for every ton of imports from China.

https://www.thestar.com.my/business/business-news/2019/04/12/ecrl-to-go-ahead-as-costs-reduced-by-rm2pt5b-to-rm44b/


Based on the original plans, 44 tunnels are to be constructed at various locations spanning over 50km. The longest tunnel (which is now likely to be scrapped) is the Genting Tunnel measuring 17.8km (37% of total tunnel length).


The ECRL is of strategic importance to China because the Kuantan Port-ECRL-Port Klang route shortens its trading route and cuts the time it takes to travel to the west of Peninsular Malaysia while eliminating the need to use the Singapore Port.

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

the max reduction from its original tunnel volumes is 37% only, but more importantly it benefits MMC Corp's Port & Logistics division.

you syphon out trades directly from China instead of getting via Singapore Port route

18.Current prospects (extract from Financial report ending 31 Dec 2018)
..................................

Ports & Logistics division is expected to record positive volume growth across all the ports. Further, the completion of acquisition of the balance 51% interest in Penang Port Sdn Bhd in May 2018 will reflect its full year contribution to the division’s financial performance.

The acquisition allows the Group to establish a strong foothold in the Northern region of Peninsular Malaysia and complement the Group’s strategic presence throughout the Straits of Malacca.

Operational and cost synergies driven by MMC, would further improve the performance of its Ports & Logistics division.

The Energy & Utilities division is expected to contribute positively from the Group’s associated companies, namely Malakoff and Gas Malaysia.

Substantial existing order-book provides earnings visibility for the Engineering division anchored by the KVMRT-SSP Line underground and elevated work.

Furthermore, the earnings contribution from Engineering division will be sustained by on-going projects including Langat 2 Water Treatment Plant and Langat Centralized Sewerage Treatment Project.

feeling hungry for milk now....

it was 2.6 just 2 years ago...considered rock bottom now

3ii...you want petdag or nestle?

please decide

if no news from you, Punter will select the one he prefers end of the day

Today is the official closing date...

all sifus who had not submitted or would like to amend the stock selected above can do so by today


the winners no matter who (even if its 3ii) will have my utmost respect
...................................................................

its the ultimate test of your skills-knowledge

all great sifus are participating...its your chance to prove it

results by end of 2019.

this gas explosion news is actually a short term opportunity to buy..but i dont think one will make a good % profit trading in short term

i have some other reason (so far not disclosed) which i think pchem next earnings will be bad...i would like to verify this by seeing the earnings next qtr before concluding on pchem...

let us see Gkent vs PChem in 1 month from now....main main a bit

ok sifu...note taken. Mindset....not sure will change.

Posted by Heavenly PUNTER > Apr 12, 2019 10:48 AM | Report Abuse

probability you need to change your mindset lah.... buy quality, buy competitive advantaged company... Average down when it falls... not sell... the more you trade the easier you lose money!

Investment Highlights

We maintain our BUY recommendation on Petronas Chemicals Group (PChem) with an unchanged fair value of RM10.40/share based on an unchanged FY19F EV/EBITDA of 10x — 3SDs above its 3-year average of 8x given the stock’s correlation to crude oil prices.

Online media reported that an explosion and fire occurred at the Petronas' Refinery and Petrochemical Integrated Development (RAPID) project in Pengerang today. The blast, which appears to stem from a leaking gas tank, was loud enough to be heard within a 50km radius of the project. So far, two persons have been reported to be injured in the incident.

Recall that the group’s 50%-owned Pengerang petrochemical division has reached mechanical completion of 96% with production expected to commence towards the later parts of 2HFY19. Back in 2017, PChem has sold a 50% stake in PRPC Polymers to Saudi Aramco for RM3.8bil (US$900mil).

Given Petronas' strict adherence to health, safety and environment requirements, we expect an extensive investigation into the causes of this incident, which could delay the commencement of petrochemical production.

Management expects minimal contributions this year, with plant utilization around 70% for the first 3–6 months which will progressively ramp up to 90% over a time frame yet to be confirmed due to the complexity and integration required with Petronas’ refinery.

Likewise, our FY19F forecasts have not incorporated any increase in PChem’s output given that the group has guided that average plant utilization could remain flattish above 90%, similar to FY16–FY18. This is supported by 5 major TA activities this year, which will be spread out over 1QFY19 and 3QFY19, as compared with 6 in FY18.

However, if the RAPID investigations defer production next year, we expect a 6-month delay to cause PChem’s FY20F earnings to slightly decline by 3%, assuming product prices are stable. For now, we maintain our forecasts pending further clarity from management.

Even though management’s market guidance for 1QFY19 was bearish, we remain sanguine given that the group’s product prices have a strong correlation to Brent crude oil prices which have risen by 37% since 31 Dec 2018 to US$71/barrel currently.

This will be a greater impact to the group than temporary delays in RAPID commencement as a 1% increase in average product prices will translate to a higher 3% rise in net profit.

PChem currently trades at a reasonable FY19F EV/EBITDA of 9x, which translates to a 26% discount (vs. its 3-year average discount of 17%) to Taiwan-based Formosa Petrochemicals’ premium 12x, while its dividend yields are fair at 4%.

https://klse.i3investor.com/blogs/AmInvestResearch/202079.jsp

thats true within small caps...but not true between big cap and small caps i think

Posted by Fabien Extraordinaire > Apr 12, 2019 10:43 AM | Report Abuse

very difficult strategy if u keep moving ur funds towards potential stocks with immediate catalysts

u need to have a very high hit rate to remain profitable

me too.. now days all are my sifu..youngest is Punter