Posted by kcchongnz > 2018-10-02 18:38 | Report Abuse
Your knowledge about NPV, IRR and payback period on Jaks power plant is highly in doubt. Certainly there is no way you can compare with DK66. Everyone can see the latter, may be not the earlier.
But let me refute your knowledge of NPV, IRR and payback period, the essential financial evaluation of a project.
There is no projected cash flows given by the JV, although they must have their estimates. Neither DK66 knows that, and I don't think he claims he knows it. Nobody bothers to give you those cash flows, but an indicative IRR. It is from the given IRR, the concession period and the estimated project costs we can roughly estimate the future cash flows of the project.
Hence point no. 1, I agree with DK66 that the IRR of 12% given is the project IRR, and not what as asserted by your previous comment below,
"The IRR of 12% is to equity, not to project, and no this is a statement, not a guess"
From what you are basing on to make such a statement?
I think when IRR is mentioned for a project, it is normally project IRR, as a project viability in financial appraisal normally is independent of the capital structure to be used.
Project IRR of 12%, "therefore Equity IRR is 30%"? How do you connect the two statements?
High equity IRR of more than 30% is not impossible, and I think in Jaks's case, it could very well be. But you must understand the concept of IRR, that all cash flows are reinvested at that rate of return. How to get a return of 30+% from the future cash flows?
Hence equity IRR may not be relevant, what is relevant is the future cash flows for Jaks, what are their magnitude and what is the present value of those future cash flows, and what is it translated to per share of diluted number of shares of Jaks.
An IRR doesn't mean the payback period is 8 years as in your statement below. It is not as straightforward is 1/12%. It is something to do how many years those cash outs are even out from cash ins.
That is why I said you may sound loud, but I doubt you are good as DK66.
Posted by valuelurker > Oct 1, 2018 10:48 PM | Report Abuse
You everyday harp on the same thing people will say you're a nag old man kcchong
You believe DK66 and say he's knowledgeable, so believing those facts, and inputting those numbers into your spreadsheet, that should give you the NPV - 'IRR 12% is to Project, therefore Equity is 30%++'
Instead you revert back to your 'common sense' and disregard the model, the theory, the maths, the thought process...
Youre like the scientist who has a hypothesis, runs the experiment, and the results do not conform to his hypothesis, then proceeds to disregard the test results and sticks to his hypothesis because thats what his 'gut' tells him - yeah way to go scientific advancement lol. Next time when you cannot prove or disprove something, dont go and tell the world you agree/disagree with someone - youre just like another one of those who are going to mislead people
Old man koon has access to management, he's substantial shareholder - at the start he was touting the massive 'construction profits', wanting to con the masses with the 'massive construction profits' and then it first proposed that the profits are not real, he now pivots to 'the 30% share in he IPP is free' - in that whole time, he has never mentioned anything about the yearly cashflows over the period of the 25 years of the IPP - oh he knows, and he knows its nothing to shout about - IRR 12% equals payback in 8 years, only desperate to change their fortunes JAKS would accept such lousy returns for an overseas venture.
But just like your 'too good to be true' common sense, all of this is still just conjecture and guesses
None of it is irrefutable, absolute truth
