Posted by stockraider > 2019-09-29 11:13 | Report Abuse

In investment it is always better look forward on armada, if u keep looking back at the past u will be obviously missing great investing opportunity on armada loh...!!

1. Armada already undergo vast impairment & writedown to conservatively clean up their books.
It has brought down its high borrowing from Rm 16 billion to rm 10.4 billion and the trend u can see is obvious qtr reduction in borrowing loh....!!

2. Most importantly the latest qtr profit and revenue easily exceed yinson a rm 7 billion mkt cap company by about double, a great sign of sharp improvement trend loh...!!

3. As for sustainability armada has rm 20 billion order books another very positive sign for the company loh...!!

4.Bottom line, just focus on Armada's performance over the last two quarters you will see that it's on the upwards trends.
Orderbook remains steady at RM20.2b (FPO: RM19.1bn, OMS: RM1.1bn) another RM10.3bn worth of potential extension. This will sustain the group’s revenue for the next few years.

For Potential upside, please see mikekim comments earlier...
It will get even better in 2H2019 with 4 key upsides:

1) Claire US$285m compensation
2) Kraken ~US$280m partial/full write back
3) Kraken debt restructure to LT
4) Net profit growth

Hence. we can expect better result in next quarter.

5.Moving forward, Global FPSO Market is expected to grow USD+ 30 Billion by 2025.

Top Key Players:
BP, Petronas, Chevron, ExxonMobil, Shell, Petrobras, Bumi Armada Berhad, SBM Offshore, BW Offshore, MODEC, Bluewater Energy Services B.V., Aker Solutions ASA, Yinson Holdings Berhad, Teekay Corporation, among others.

Armada Value Proposition
1. A Top 5 FPSO operator in the world by fleet size. Operating presence in Asia, Africa and Europe. T&I and OSV (lossmaking) are complementary businesses.
2. Unlike OSV and T&I operations, FPSO’s contracts are more bankable, providing steady visibility (long-term charters, termination protection) with reasonable project IRRs.
3. FPSOs tender pipeline is strong. Winning a job is a catalyst.

Latest Valuation for Armada
Operations (MMYR) Details
- TGT1 (Vietnam) 835, NPV (6-year extension), 5.6% WACC
- D1 (India) - 50% 266 NPV (firm); 5.6% WACC
- C7 (India) - 50% 266 NPV (firm); 5.6% WACC
- Kraken - 100% 1,470 NPV (firm); 7.0% WACC
- Olombendo - 100% 4,831 NPV (firm); 5.8% WACC
- Madura (Indonesia) - 50% 385 NPV (firm); 5.8% WACC
- Malta FSU 609 NPV (firm); 5.8% WACC
- Kakinada – 30% 486 NPV (firm); 7.0% WACC

FPSO 9,146,000,000

It a very SOLID Company and we should be proud to be part of this success story...

Posted by DK66 > 2019-09-29 11:16 | Report Abuse

Kcchongnz,

What you are calculating is equity IRR not Project IRR.

Please allow me some times to come back to you my observations on your computation in detail.

Thank you for your active contribution.

--------------------------------------
kcchongnz Payback period.

Initial outlay by JV = USD468m

Payback period = 8 years

Cash flow per year = 468/8 = USD58m

If we use USD 58m of cash inflow, you will find that the IRR for the equity shareholders of the JV is actually very close to 12%.

Posted by DK66 > 2019-09-29 11:18 | Report Abuse

stockraider,

Armada ???????????

Posted by stockraider > 2019-09-29 11:19 | Report Abuse

Armada is a good alternative investment compare with jaks power plant loh.....!!

Posted by SarifahSelinder > 2019-09-29 13:10 | Report Abuse

Armada punya figures hv always looked "very very good n impressive" since share price nya 3.+ dulu till 0.3+ skrg!!

Rights issues coming for armada very soon

Posted by SarifahSelinder > 2019-09-29 13:14 | Report Abuse

DK take ur time

Buat kiraan guna the IPP JV co perspective then 30% 40% mungkin lebih senang to see

Posted by SarifahSelinder > 2019-09-29 13:24 | Report Abuse

Whatever...

Sarifah berjiwa IPP tetap unapologetic angkuh dan liar

Sarifah trust the China banks the CPECC the lawyers the JAKS Technical team the other experts n specialist

Posted by DK66 > 2019-09-29 13:58 | Report Abuse

Kcchongnz,

I computed in detail your cash flow estimate and found that the project IRR is 7.03%.

18 installment of US$122m means a total interest payment of US$796m

I found that at 6% interest rate and equal annual installment of US$122m will only pay off the loan in 20 years. The total interest payment would be US$1042m

Unfortunately, when i tried to post workings here, it becomes unreadable;

Year Principal Interest Principal Total Cash Flow
(I) (P) (I+P) -468
-468
-468
-468
1 234 1,400 84 38 122 150
2 234 1,362 82 40 122 152
3 234 1,322 79 43 122 155
4 234 1,279 77 45 122 157
5 234 1,234 74 48 122 160
6 234 1,186 71 51 122 163
7 234 1,135 68 54 122 166
8 234 1,081 65 57 122 169
9 234 1,024 61 61 122 173
10 234 963 58 64 122 176
11 234 899 54 68 122 180
12 234 831 50 72 122 184
13 234 759 46 76 122 188
14 234 682 41 81 122 193
15 234 601 36 86 122 198
16 234 516 31 91 122 203
17 234 424 25 97 122 209
18 234 328 20 102 122 214
19 234 226 14 108 122 220
20 234 117 7 115 122 227
21 234 234
22 234 234
23 234 234
24 234 234
25 234 234
1042 1398 IRR 7.03%

Posted by DK66 > 2019-09-29 14:10 | Report Abuse

Trying my best to make it readable
Year .......Principal .Int ..Principal Total ..Cash Flow
-----------------------(I) -----(P)--- (I+P)..(-468)
.........................................................(-468)
.........................................................(-468)
.........................................................(-468)
1 ....234 ....1,400 ....84 ....38 ....122 .......150
2 ....234 ....1,362 ....82 ....40 ....122 .......152
3 ....234.... 1,322 ....79 ....43 ....122 .......155
4 ....234 ....1,279 ....77 ....45 ....122 .......157
5 ....234 ....1,234 ....74 ....48 ....122 .......160
6 ....234 ....1,186 ....71 ....51 ....122 .......163
7 ....234 ....1,135 ....68 ....54 ....122 .......166
8 ....234 ....1,081 ....65 ....57 ....122 .......169
9 ....234 ....1,024 ....61 ....61 ....122 .......173
10 ...234 ....963 ......58 ....64 ....122 .......176
11 ...234 ....899 ......54 ....68 ....122 .......180
12 ...234 ....831 ......50 ....72 ....122 .......184
13 ...234 ....759 ......46 ....76 ....122 .......188
14 ...234 ....682 ......41 ....81.... 122 .......193
15 ...234 ....601 ......36 ....86 ....122 .......198
16... 234 ....516 ......31 ....91 ....122 .......203
17 ...234 ....424 ......25 ....97 ....122 .......209
18... 234 ....328 ......20 ....102 ...122....... 214
19 ...234 ....226 ......14 ....108 ...122 .......220
20 ...234 ....117 ......7 .....115 ...122 .......227
21 ...234 ...............................................234
22 ...234 ...............................................234
23 ...234 ...............................................234
24 ...234 ...............................................234
25 ...234 ...............................................234
.......................1042... 1398 ..........IRR 7.03%

Posted by DK66 > 2019-09-29 14:14 | Report Abuse

Cash flow per year of US$58 is only about half of the annual distribution made by Mong Duong II. Doesn't seem reasonable.

-----------------------------------------
kcchongnz Payback period.

Initial outlay by JV = USD468m

Payback period = 8 years

Cash flow per year = 468/8 = USD58m

If we use USD 58m of cash inflow, you will find that the IRR for the equity shareholders of the JV is actually very close to 12%.
29/09/2019 10:32 AM

Posted by DK66 > 2019-09-29 14:26 | Report Abuse

In any case, even if I changed the principal payment to yearly US$78m, the project IRR is still only 7.5%

Year .......Principal .Int ..Principal ..Cash Flow
-----------------------(I) -----(P)--- ..(-468)
...................................................(-468)
...................................................(-468)
...................................................(-468)
1 ....234 ....1,400 ....84 ....78 .... .......150
2 ....234 ..............79 ....78 ... ........155
3 ....234...............75 ....78 .... .......159
4 ....234 ..............70 ....78 .... .......164
5 ....234 ..............65 ....78 .... .......169
6 ....234 ..............61 ....78 .... .......173
7 ....234...............56 ....78 .... .......178
8 ....234 ..............51 ....78 .... .......183
9 ....234 ..............47 ....78 .... .......187
10 ...234 ..............42 ....78 .... .......192
11 ...234 ..............37 ....78 .... .......197
12 ...234 ..............33 ....78 .... .......201
13 ...234 ..............28 ....78 .... .......206
14 ...234 ..............23 ....78.... ........211
15 ...234 ..............18 ....78 .... .......216
16... 234 ..............14 ....78 .... .......220
17 ...234 ...............9 ... 78..... .......225
18... 234 ...............4 ... 78 ........... 230
19 ...234.........................................234
20 ...234 ........................................234
21 ...234 ........................................234
22 ...234 ........................................234
23 ...234 ........................................234
24 ...234 ........................................234
25 ...234 ........................................234
....................... 796... 1404 ......IRR 7.5%

Posted by DK66 > 2019-09-29 14:27 | Report Abuse

I wish i3 can improve on tabulation writings

Posted by DK66 > 2019-09-29 14:48 | Report Abuse

However, if the US$234 has already netted off the interest costs, the project IRR increase to 9.76%. Still below 12% but closer.

Year
..-468
..-468
..-468
..-468
1 234
2 234
3 234
4 234
5 234
6 234
7 234
8 234
9 234
10 234
11 234
12 234
13 234
14 234
15 234
16 234
17 234
18 234
19 234
20 234
21 234
22 234
23 234
24 234
25 234
IRR 9.76%

Posted by Sslee > 2019-09-29 15:27 | Report Abuse

Dear DK66.
For simple project payback period or IRR:
Project Cost: USD 1870 million.
8 years payback: Per year 1870/8= 233.73 million
233.75 million Payment for 25 years is about IRR of 12% for capital outlet of USD 1870 million.
From this simple basic then you have different model depend on loan and equity sum and disbursement timing. The yearly 233.75 million net off the agreed interest payment, loan principle payment and payment period to work out the full 25 years cash distribution for equity parts of the JV. From the 25 years distribution for equity you can work out the IRR for equity part and also NPV for equity part base on different discount rate.

Thank you

Posted by kcchongnz > 2019-09-29 16:04 | Report Abuse

Posted by DK66 > Sep 29, 2019 2:48 PM | Report Abuse
However, if the US$234 has already netted off the interest costs, the project IRR increase to 9.76%. Still below 12% but closer.

DK66, I agree with your cash flows estimation here, but not sure what you mean by your statement that it has netted off the interest cost.

My interpretation is that USD234m is the cash flows for the firm, the JV, and that belongs to both the equity and debt holders. But with that cash flows, and if it is constant, that won't give you an IRR of 12%, but just 9.8% as stated by you, which I agree. So it is likely the assumption was the cash flow is not constant at USD234, but increasing, say according to inflation or whatever, or simply the assumption of estimation the cash flow using payback period is incorrect.

To get the cash flows of the equity holders, you have to deduct the cash flows for the debt holders, which includes principle and interest payments, before you apportion it to both equity and debt holders. That is why I don't understand what you mean by "the US$234 has already netted off the interest costs", and that when you calculate the cash flows to Jaks in the article that you did not take this into consideration.

Another question is why did the management guided that the cash flow to the company was about RM100m only, which is substantially less than what is being estimated by you and me? is it because our estimation of cash flows based on assumption of the payback period was incorrect? Or the management deliberately hiding something? For example something not related to our "pay", but rather more on "kick".

Posted by DK66 > 2019-09-29 16:24 | Report Abuse

What I mean is interest costs should be added back to get the net cash flow from operation.

eg. for year 1 (234+84), year 2 (234+79) etc

Year
.. -468
.. -468
.. -468
.. -468
1 318
2 313
3 309
4 304
5 299
6 295
7 290
8 285
9 281
10 276
11 271
12 267
13 262
14 257
15 252
16 248
17 243
18 238
19 234
20 234
21 234
22 234
23 234
24 234
25 234
IRR 12.09%

Note that interest rate affects the IRR calculation.

-----------------------------------------
DK66, I agree with your cash flows estimation here, but not sure what you mean by your statement that it has netted off the interest cost.

Posted by DK66 > 2019-09-29 16:34 | Report Abuse

Let me put forward my arguments ..... please wait

Posted by DK66 > 2019-09-29 17:07 | Report Abuse

Dear Sslee and Kcchongnz,

The centre of discussion revolves around whether interest costs have been netted off from the net cash flow used in calculating the 8 years payback period.

In my opinion, the US$233.7m represents net cash flow after netting off interest costs.

My arguments

1) 8 years payback period means the JV will take 8 years to recoup its initial investment of US$1870m (including borrowings) in CASH from operating the power plant. In another word, if the power plant halts operation after the 8th year, the JV doesn’t suffer any losses except time value of initial investment funds. To achieve break even in 8 years, the US$233.7m annual cash flow should not be utilized for interest payments. Otherwise, it will take 11 years to break even.

2) As I have demonstrated, if part of the US$233.7m is applied towards interest payments, the project IRR is just 7.5% which is far below the 12% IRR guided by management. The interest costs need to be added to the US$233.7m cash flow to arrive at 12% IRR.

3) Article paper "Payback Period and NPV: Their Different Cash Flows" by Kavous Ardalan

https://www.economics-finance.org/jefe/volume11-2/01.Payback%20Period%...

"However, in the Payback Period, there is no discounting involved and, therefore, the interest expense (after taxes) and dividend payments should be deducted from the operating cash flows when calculating the relevant cash flows for the Payback Period rule. " - Page 15

This article found that it is the net cash flow after interest costs to be used in calculating payback period.

Thank You

Posted by DK66 > 2019-09-29 17:13 | Report Abuse

I can only guess that the RM100m provided by the management actually refers to cash distribution instead of FCF or profit. This is roughly in line with distribution made by Mong Duong II.

----------------------------
Another question is why did the management guided that the cash flow to the company was about RM100m only, which is substantially less than what is being estimated by you and me? is it because our estimation of cash flows based on assumption of the payback period was incorrect? Or the management deliberately hiding something? For example something not related to our "pay", but rather more on "kick".

Posted by kcchongnz > 2019-09-29 17:27 | Report Abuse

Posted by DK66 > Sep 29, 2019 5:12 PM | Report Abuse
I can only guess that the RM100m provided by the management actually refers to cash distribution instead of FCF or profit.

I have to say this is a very wild guess.

Posted by kcchongnz > 2019-09-29 17:39 | Report Abuse

Even when we estimate cash flows from payback period is a guess. Cash flows should be given and then we compute payback period, and not the other way.

Anyway, this is the first time I estimate cash flow by using payback period. There are two ways to do it; either from the equity or the firm (equity + debt) way.

Firm way is cost of project USD1870m
Cash flows for the whole firm = 1870/8 = USD234m
This estimation is free of any capital structure. How is the project funded and how much interest and principle repayment, we don't know. However the future cash flow is distributed depends on your decision on the capital structure. How much goes to the equity shareholder and the debt holder is hence depended on the funding structure, the interest rate etc.

The bottom-line is, USD234m, the cash inflow for the whole firm has to be divided between the equity shareholders and debt holders depending on the capital structure. Hence it is strange that you add the interest cost to the cash flow of the firm.

The equity way is what I have shown before.

Posted by DK66 > 2019-09-29 17:45 | Report Abuse

Jaks management has not openly made any profit forecast in public nor given any estimates to the investment bankers or analysts.

The management told the shareholders during 2018 AGM that the profit will be more than RM100m, but during the 2019 AGM, it became RM80m-100m. I really don't know what to say.

Posted by valuelurker > 2019-09-29 17:59 | Report Abuse

Management said in AGM 2019 that its RM80-100mil..?

And here in this post, you say its RM197-263mil (previously it was RM300-500mil lol)

That's why its dangerous to give stupid people who are nerds (no, nerds are not sharp theyre dumb people who read a lot but are really slow and never quite get it) the internet, they read a little and think they know how its done

No, I do not have access to management, neither am I related to JAKS in anyway whatsoever

1. A long time ago, I mentioned the construction 'profits' are not real, they are merely accounting profits

2. I shared articles / links on the payback period and IRR from Jaks management

3. I mentioned profits attributable to Jaks was RM80-100mil a long time ago

And still this donkey66 doesnt wanna believe

Make sure you dont delete this article. A

nd make sure you hold your stock, in fact better keep adding and sialang since by your calculations, NPV per share is worth min RM2.93

Sometimes, you have to lose money to learn the one truth:

Youre pro or youre a noob, thats life

Posted by kcchongnz > 2019-09-29 18:10 | Report Abuse

Posted by DK66 > Sep 29, 2019 12:05 AM | Report Abuse
Kcchongnz,
In any case, what is your estimate of Jaks' power plant worth given your estimate of RM141m FCF ?

Jaks' worth in this power plant per share basis, in my opinion, is definitely worth a lot more than its 75 sen per share, no matter how we slice it. If you are investing in Jaks based on this assumption, I don't think you should worry about it. There is a big margin of safety.

However, when we invest in Jaks, bear in mind we are not investing in the power plant, but the whole of Jaks; its other businesses, its management especially. In this respect, I think may be good to be in it, but if one sailang on it, it is another matter. This is just my opinion.

Good luck.

Posted by kcchongnz > 2019-09-29 18:13 | Report Abuse

In any case, please continue to share your knowledge. Your sharing has been sincere. Good to get feedback, especially those different from yours to give you another side of view. This will curb some of the cognitive bias one may have.

Posted by DK66 > 2019-09-29 19:24 | Report Abuse

The capital structure of all Vietnam BOT contracts in power plant has debt/equity ratio of 75:25. This is not a coincident, it is the capital structure agreed with the Vietnam government.

The capital requirement is too huge and hence the borrowing cost is too big to be left out of consideration in decision making.

Even the loan is on non-recourse basis so as not to cause to much leverage to hinder future borrowing capacity of the parent companies.

Finally, I wish to thank Kcchongnz for his constructive inputs. Thank you.

Posted by DK66 > 2019-09-29 19:35 | Report Abuse

Valuelurker,

RM300-500m is my own unsubstantiated estimates.

The rests are derived from various methodologies which I have provided clear workings.

Even if you think your estimates are more superior than mine, there is no need to call name unless I have in some ways got into your nerves. Do you have other identities?

I never insisted on anyone to believe in my estimates Why force me to believe in your estimates which you are unable to elaborate ?

You are not obligated to me and neither am I to you. Why bother me ?


p/s I m saving this for future reference.

----------------------------
valuelurker Management said in AGM 2019 that its RM80-100mil..?

And here in this post, you say its RM197-263mil (previously it was RM300-500mil lol)

That's why its dangerous to give stupid people who are nerds (no, nerds are not sharp theyre dumb people who read a lot but are really slow and never quite get it) the internet, they read a little and think they know how its done

No, I do not have access to management, neither am I related to JAKS in anyway whatsoever

1. A long time ago, I mentioned the construction 'profits' are not real, they are merely accounting profits

2. I shared articles / links on the payback period and IRR from Jaks management

3. I mentioned profits attributable to Jaks was RM80-100mil a long time ago

And still this donkey66 doesnt wanna believe

Make sure you dont delete this article. A

nd make sure you hold your stock, in fact better keep adding and sialang since by your calculations, NPV per share is worth min RM2.93

Sometimes, you have to lose money to learn the one truth:

Youre pro or youre a noob, thats life
29/09/2019 5:59 PM

Posted by DK66 > 2019-09-29 20:09 | Report Abuse

Let me try to explain why I have to add the interest cost to get the net operating cash flow. It is mathematical.

Project investment = US$1870m
Payback Period = 8 years

Calculation to determine the payback period;

Project Investment (PI)/(Net operating cash flow (OCF) - Interest costs(I)) = Payback period (P)

Hence,

PI/(OCF - I) = P
OCF = PI/P + I

OCF = 1870/8 + I
Operating Cash Flow = US$233.7m + Interest costs
29/09/2019 8:08 PM

Posted by SarifahSelinder > 2019-09-29 21:30 | Report Abuse

Assume USD 1870m all PPE

Assume...

PAT = OCF - Depreciation 

PAT = USD 234m - 1870/25m Depreciation

PAT = USD 234m - 75m 

PAT = RM 159m x 4.2

PAT = RM 668m 

30% PAT = RM 200m

40% PAT = RM 267m 

Jz taking the calculation a bit further..

Posted by kcchongnz > 2019-09-29 22:21 | Report Abuse

Posted by DK66 > Sep 29, 2019 8:09 PM | Report Abuse
Let me try to explain why I have to add the interest cost to get the net operating cash flow. It is mathematical.
Project investment = US$1870m
Payback Period = 8 years
Calculation to determine the payback period;
Project Investment (PI)/(Net operating cash flow (OCF) - Interest costs(I)) = Payback period (P)
Hence,
PI/(OCF - I) = P
OCF = PI/P + I
OCF = 1870/8 + I
Operating Cash Flow = US$233.7m + Interest costs


I think I can see where you have gone wrong now, doubly wrong.

Payback period = PI/Operation Cash inflows of the firm

Note PI is the total cost of the project
Hence to be consistent, the operation cash flows must be the total cash inflows for the shareholders + debt holders

Total operation cash inflows, OCF = inflows for equity shareholders (E) + Inflows for debt holders (D+I)

Hence OCF = E+D+I

Whereas you call your OCF as E+D

Where D is the principle repayment = 77.8m, I is interest repayment

Inflow for debt holders = principle payment + Interest payment
= $77.8 + I

Hence payback period is 1870/(E+D+I)

Instead, you use payback period as 1870/(E+D-I), a double whammy.

You have the wrong interpretation of the article by Kavous Ardalan, where he was talking about when computing the present value of a project, one must use not deduct the interest expense, or should not use(OCF - I), or {(E+D+I)-I}, because you use WACC, which is the discount rate for the firm, not just for the equity shareholder, to be consistent.

Posted by cheoky > 2019-09-29 22:23 | Report Abuse

TADMAX

Posted by DK66 > 2019-09-29 23:06 | Report Abuse

I think I have been terrible at explaining myself. I should have known adding Interest costs to cash flow is very confusing to many.

Let me digest your points and I shall find a better way to express my logic.

Please wait till tomorrow as I m not feeling well. Feeling sleepy after medication.

Thanks

----------------------------
I think I can see where you have gone wrong now, doubly wrong.

Payback period = PI/Operation Cash inflows of the firm

Note PI is the total cost of the project
Hence to be consistent, the operation cash flows must be the total cash inflows for the shareholders + debt holders

Total operation cash inflows, OCF = inflows for equity shareholders (E) + Inflows for debt holders (D+I)

Hence OCF = E+D+I

Whereas you call your OCF as E+D

Where D is the principle repayment = 77.8m, I is interest repayment

Inflow for debt holders = principle payment + Interest payment
= $77.8 + I

Hence payback period is 1870/(E+D+I)

Instead, you use payback period as 1870/(E+D-I), a double whammy.

You have the wrong interpretation of the article by Kavous Ardalan, where he was talking about when computing the present value of a project, one must use not deduct the interest expense, or should not use(OCF - I), or {(E+D+I)-I}, because you use WACC, which is the discount rate for the firm, not just for the equity shareholder, to be consistent.
29/09/2019 10:21 PM

Posted by qqq3 > 2019-09-29 23:12 | Report Abuse

forget kc...he got no common sense one, some times I suspect , he is a robot...........................

Posted by qqq3 > 2019-09-29 23:23 | Report Abuse

dk....


I have read a lot of literature recently that prices of alternative energies dropping so fast so far that variable cost of some coal plants cannot compete with full costing of the newer solar plants.......resulting in closures of coal plants in America left, right and center..........


so...if that is correct......the only protection for this plant are the signed agreements..............that is not a good basis for investors, and the reason it is still below $ 1............

one has to be a coal plant expert to dig through all the data ...well....who can say he is an expert? so even fund managers who has no idea would stay away for now.............

Posted by qqq3 > 2019-09-29 23:29 | Report Abuse

20 years ago, maybe even 10 years ago, IPP was a popular play..........

Malakof has been disappointing to those who bought during IPO, YTL have gone no where in recent years.............

its a different era compared to those days............

Posted by edkfc > 2019-09-29 23:56 | Report Abuse

i am reposting to get your opinion...tks

DK66 and KCChongnz and others with interest in finding DCF for Jaks ! Seeking your opinion if the following formula is technically correct and can be reliably used for forecasting Jaks's Vietnam Power Project Free Cashflow with stated assumptions ?

Scenarios when cash inflows are even for all periods :

NPV = [R ×1 − (1 + i)power-n− PV]/i

In the above formula,
PV = Initial Investment
R is the net cash inflow expected to be received in each period;
i is the required rate of return per period;
n are the number of periods during which the project is expected to operate and generate cash inflows.

If we take i=IRR; NPV = 0
Therefore :

NPV = [R ×1 − (1 + i)power-n− PV]/i = 0

Hence R = PV/ {1 − (1 + i)power-n }/i

Thanks guys...hope to start a fruitful discussion !

Posted by kcchongnz > 2019-09-30 00:41 | Report Abuse

Posted by qqq3 > Sep 29, 2019 11:12 PM | Report Abuse
forget kc...he got no common sense one


Common sense?

Lets see who has common sense and who doesn't.

In the last two to three years, the idiot qqq3, aka Desa6767, Brightsmart, Loneranger, Stockmanny, etc. has been shouting sailang and margin on the stock mentioned here, Jaks, when it was trading at RM1.80+, and Sendai when it was trading at RM1.40+ in i3investor.

KC has written tens of articles here to to give detail analysis why investors must be caution about these two stocks at those prices.

Today, Jaks and Sendai are trading at 75 sen and 40 sen respectively, for a whopping loss of 58% and 71% respectively.

So who has common sense and who doesn't?

More recently, KC has written a few articles about London Biscuit and its the various irregularities about it when it was trading at 20+sen, and the same idiot qqq3, aka Desa6767, Brightsmart, Loneranger, Stockmanny, etc. wrote numerous comments and bought loads of it, and also shouting buy buy buy in this forum. London Biscuit is trading at 10 sen now, a loss of more than 50% in just a few weeks.

Who has common sense, and who doesn't?

isn't that pretty clear?

Posted by qqq3 > 2019-09-30 01:04 | Report Abuse

kc...how to make money? when there is chance to make money, u sailang, all in and margin...when substantial shareholder is disposing, u step aside lah....its basic....


no need DCF one..............................

Posted by Sslee > 2019-09-30 07:33 | Report Abuse

Hahahaha,
Qqq3 to you know what is the NG price compare to cosl price in US?

Posted by SarifahSelinder > 2019-09-30 08:39 | Report Abuse

25 75 10 6 WACF 8.5

Posted by qqq3 > 2019-09-30 08:54 | Report Abuse

by Sslee > Sep 30, 2019 7:33 AM | Report Abuse

Hahahaha,
Qqq3 to you know what is the NG price compare to cosl price in US?
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I will assume its not just solar, its also the shale gas that is replacing the coal plants in US..........

Posted by DK66 > 2019-09-30 08:55 | Report Abuse

edkfc,

Thanks for joining the discussion.

Please carry on, I need to see what you can achieve with

R = PV/ {1 − (1 + i)power-n }/i

Posted by DK66 > 2019-09-30 09:42 | Report Abuse

Kcchongnz,

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Payback period = PI/Operation Cash inflows of the firm

Note PI is the total cost of the project
Hence to be consistent, the operation cash flows must be the total cash inflows for the shareholders + debt holders

Total operation cash inflows, OCF = inflows for equity shareholders (E) + Inflows for debt holders (D+I)

Hence OCF = E+D+I

Whereas you call your OCF as E+D

Where D is the principle repayment = 77.8m, I is interest repayment

Inflow for debt holders = principle payment + Interest payment
= $77.8 + I

Hence payback period is 1870/(E+D+I)

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I think maybe it is best that I carry on my explanation within your context

Yes, I agree that the total cash flow from the power plant has to include E,D and I which are all included in my definition of OCF. ie, my OCF = E+D+I

My point is to determine the Payback period of the JV, the interest component (I) must be excluded because it represents a cost item to the JV. This is precisely the point made in the article by Kavous Ardalan on Payback Period. I wasn’t referring to his point on NPV.

Hence payback period should be PI/((E+D+I) – I) in your context, or PI/(OCF – I) in my context.

Posted by DK66 > 2019-09-30 10:00 | Report Abuse

A country must have a diversified power supply landscape. That is why vietnam is still developing coal power plant.

Solar power has its limitations, unpredictable weather conditions, limited operating hours, etc

Jaks Hai Duong power plant is protected by the PPA. I trust that the vietnam government has its reasons for coal power plants.

Even US today is still very dependent on coal power albeit a smaller amount.

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qqq3 dk....


I have read a lot of literature recently that prices of alternative energies dropping so fast so far that variable cost of some coal plants cannot compete with full costing of the newer solar plants.......resulting in closures of coal plants in America left, right and center..........


so...if that is correct......the only protection for this plant are the signed agreements..............that is not a good basis for investors, and the reason it is still below $ 1............

one has to be a coal plant expert to dig through all the data ...well....who can say he is an expert? so even fund managers who has no idea would stay away for now.............
29/09/2019 11:23 PM

Posted by DK66 > 2019-09-30 10:03 | Report Abuse

US has abundant natural gas nowadays. Naturally, it becomes a better choice for them to develop gas power. Can it be the same for Vietnam ?

Posted by DK66 > 2019-09-30 10:06 | Report Abuse

That is why Trump is demanding Vietnam to buy Coal from the US

Posted by DK66 > 2019-09-30 13:34 | Report Abuse

Kcchongnz,

You are right, whatever discussion we are having now won't change the fact that Jaks is definitely undervalued at 75 cents.

I thank you for sharing your views.

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kcchongnz
Jaks' worth in this power plant per share basis, in my opinion, is definitely worth a lot more than its 75 sen per share, no matter how we slice it. If you are investing in Jaks based on this assumption, I don't think you should worry about it. There is a big margin of safety.

However, when we invest in Jaks, bear in mind we are not investing in the power plant, but the whole of Jaks; its other businesses, its management especially. In this respect, I think may be good to be in it, but if one sailang on it, it is another matter. This is just my opinion.

Good luck.
29/09/2019 6:10 PM

Posted by Hanyeong1105 > 2019-09-30 14:53 | Report Abuse

Dear DK66, i have deeply appreciated your contribution on the forum and fellow who join the discussion.

I strongly believe JAKS will success in this BOT and gain lucrative cash flow in future but my stool brain really can't understand so many calculation on IRR, payback period on interest and principal.

I just know Hai Duong power plant is 3rd BOT in Vietnam which AES Corportion have completed Mong Duong 2-BOT on YR2015 and China Southern Power Grid Company have completed Vinh Tan-BOT on YR2018.
Base on my own research, both company annual report show positive accounting profit on Vietnam project.
Now the CPECC should have more enough competent to complete on this BOT and contribute more profit to JAKS account in future.

Second. Recent year AES corporation have sign more and more MOU with Vietnam government.It mean is profitable from previous project and Vietnam government so far is reliable and trusted for the IPP project.

Third. ALP have inject so much of his personal fund for this BOT project who sure will keep in view to successful, otherwise he will loss million and million.

Now, i am very jealous who still got bullet to acquire JAKS with cost 0.74 because is really undervalued.

Posted by DK66 > 2019-09-30 15:05 | Report Abuse

Hanyeong1105,

Jaks management was rather muted in giving earnings guidance on its Hai Duong power plant. Hence, I had to use various methodologies to provide some valuations to the power plant with certain degree of comfort.

I m glad that you like my sharing. Thanks.

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Hanyeong1105 Dear DK66, i have deeply appreciated your contribution on the forum and fellow who join the discussion.

Posted by DK66 > 2019-09-30 23:18 | Report Abuse

Personally, among the various methods including IRR, Payback and DCF, used to forecast the cash flow or profit of Hai Duong power plant, I found peer comparison with Mong Duong II the most convincing. Especially the capacity charge of US$253m in 2018 gave me a base price for evaluation purposes.

Mong Duong II is a very close model for Hai Duong Plant, much closer than any business comparison you can find. I m very confident in their resemblance; their capital structures, the locations, their sizes, their PPAs, CSAs, BOT contracts etc.

If you are interested, you can visit;

"Jaks Resources – Peer Comparison With Mong Duong II"

https://klse.i3investor.com/blogs/Jaks%20resources/204451.jsp