Posted by DK66 > 2019-10-02 22:57 | Report Abuse

This method of calculation is much easier to understand compared to IRR, Payback period, and Discounted cash flow valuation methods

Posted by DK66 > 2019-10-02 23:21 | Report Abuse

I have ignored the coal transportation cost as it is using domestic anthracite coal

Posted by stteck > 2019-10-02 23:54 | Report Abuse

90℅ of EBITDA goes to bank repayment and director pocket, thanks

Posted by DK66 > 2019-10-03 00:12 | Report Abuse

I think I should use net profit rather than Ebita to determine Jaks' valuation. So, I made changes to the article.

Posted by Ricky Yeo > 2019-10-03 05:16 | Report Abuse

Any reason why PE 10 is the 'right' valuation? Why not 9? or 11? or 15?

Posted by Sslee > 2019-10-03 07:29 | Report Abuse

Dear DK66,
You need to account in the auxiliary power consumption.

Posted by DK66 > 2019-10-03 08:14 | Report Abuse

Ricky Yeo, 10 is kind of like the "standard". Personally, I think it should be 15x PE for power generation business.

Posted by DK66 > 2019-10-03 08:17 | Report Abuse

Dear Sslee, anyway, Jaks power plant is expected to deliver 8b kWh annually. I didn't want to complicate the calculation.

Posted by Sslee > 2019-10-03 08:25 | Report Abuse

Dear DK66,
You need to deduct 10% from the revenue because auxiliary power is for own use or non revenue power generated. You only have renenue for power supply to grid.

Posted by Ricky Yeo > 2019-10-03 08:32 | Report Abuse

If it is a 'standard', all less than PE 10 stocks are undervalued?

Posted by DK66 > 2019-10-03 08:32 | Report Abuse

Dear Sslee,

Auxiliary consumption is about 8%. As i have said, I wanted to keep my calculation simple. So, I used 77% base load for calculation of output. In any case, Jaks Hai Duong plant is expected to deliver 8b Kwh to the grid under normal conditions.

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Sslee Dear DK66,
You need to deduct 10% from the revenue because auxiliary power is for own use or non revenue power generated. You only have renenue for power supply to grid.

Posted by DK66 > 2019-10-03 08:43 | Report Abuse

Ricky Yeo,

10 is just a line. I believe 10 is considered fair and reasonable in most cases. Stable and safe businesses will have higher PE.

It also depends on market conditions. For US tech stocks now, anything below 20 is consider cheap.


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Ricky Yeo If it is a 'standard', all less than PE 10 stocks are undervalued?
03/10/2019 8:32 AM

Posted by Ricky Yeo > 2019-10-03 09:24 | Report Abuse

Never mind. That doesn't answer the question why 10 is considered fair. Why not 10.5? Why not 12 be fair? What's the underlying principle that tells why PE 10 is fair for a stock and not fair for another stock?

Posted by Ricky Yeo > 2019-10-03 09:25 | Report Abuse

And again why tech stock is cheap below 20? aka fair at 20? why not PE 10? Are WeWork a tech stock or property? Would that decide whether WeWork should be valued at 10 or 20?

Posted by DK66 > 2019-10-03 09:26 | Report Abuse

Ricky Yeo,

In your opinion, what PE is fair for Hai Duong Plant ?

Posted by Up_down > 2019-10-03 09:41 | Report Abuse

DK66. Finance cost is rather high in Vietnam. Average interest rate 9% is more suitable in reflecting current prevailing market rate.

Posted by DK66 > 2019-10-03 09:43 | Report Abuse

The US$1.4b borrowing is in US$ and is financed by 3 chinese banks.

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Up_down DK66. Finance cost is rather high in Vietnam. Average interest rate 9% is more suitable in reflecting current prevailing market rate.

Posted by DK66 > 2019-10-03 09:46 | Report Abuse

I think 6% interest rate is fair enough given that the 30 years treasury yield is only about 2%.

Posted by dailyklse2010 > 2019-10-03 09:49 | Report Abuse

Dear DK66,

Very thanks your sharing which has energized my confidence and reaffirmed my belief with sailang all my 10yr saving in JAKS with average price 0.81 since 1 year ago.

I hope this is one of my best choice in my life.

Posted by DK66 > 2019-10-03 09:54 | Report Abuse

dailyklse2010,

Thanks, You must be very confident in Jaks to sailang all your savings.

I think you need to have contingency plan for unexpected outcomes.

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dailyklse2010 Dear DK66,

Very thanks your sharing which has energized my confidence and reaffirmed my belief with sailang all my 10yr saving in JAKS with average price 0.81 since 1 year ago.

Posted by Up_down > 2019-10-03 10:10 | Report Abuse

Vietnamese government is restricted borrowing in USD to reduce dollarization recently. Not sure if there is any effect to Hai Duong plant loans.

Vietnam central bank clamps down on foreign currency borrowing for imports
https://e.vnexpress.net/news/business/economy/vietnam-central-bank-clamps-down-on-foreign-currency-borrowing-for-imports-3989739.html

The US$1.4b borrowing is in US$ and is financed by 3 chinese banks.
Posted by DK66 > Oct 3, 2019 9:43 AM | Report Abuse

The US$1.4b borrowing is in US$ and is financed by 3 chinese banks.

Posted by DK66 > 2019-10-03 10:13 | Report Abuse

Up_down,

The financing arrangement of the power plant needs to be approved by Vietnam government. The financial close was achieved in Oct 2015 and approved by the vietnam government.

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Up_down Vietnamese government is restricted borrowing in USD to reduce dollarization recently. Not sure if there is any effect to Hai Duong plant loans.

Vietnam central bank clamps down on foreign currency borrowing for imports
https://e.vnexpress.net/news/business/economy/vietnam-central-bank-cla...

Posted by dailyklse2010 > 2019-10-03 10:18 | Report Abuse

Nowadays, JAKS condition is more stable than that time i bought although still facing paper loss. My heart already go through the test of KYY dumping period.

My worst condition is back to 40 cent which i still got 5 year saving.

Posted by DK66 > 2019-10-03 10:20 | Report Abuse

dailyklse2010,

Your suffering, patient and confidence will be handsomely rewarded.

Posted by DK66 > 2019-10-03 10:35 | Report Abuse

This article provided a calculation methodology that is comprehensible by most readers here. It shows the earning potential of a power plant in Vietnam.

However, I must caution readers that this method can only be used as a reference. Jaks power plant earning is governed by the PPA which is a 2 tiers system; capacity and energy payments.

Nevertheless, this article demonstrates the prospect of power generation business in Vietnam.

Posted by dailyklse2010 > 2019-10-03 10:36 | Report Abuse

Dear DK66,

Your are my lighthouse when i almost lost.
I guess your large portion of fund also in JAKS. am i right ? haha

Lets us win together.

Posted by DK66 > 2019-10-03 11:32 | Report Abuse

Let us win together

Posted by andry_ong > 2019-10-03 15:05 | Report Abuse

DK66, Please correct if i'm wrong, the 1st 600MW will be completed in 2020 and 2nd 600MW will be 2021. The revenue as your calculation will happen in 2021 end. However by next year, Jaks can realizes the 1st unit and i believe the share price will sky rocket to 1.5.

Posted by DK66 > 2019-10-03 15:09 | Report Abuse

andry_ong, That is based on the deadline for completion agreed with the vietnam government. It is normally completed 6 months ahead of schedule. I expect both units to be completed before end of 2020.

Posted by andry_ong > 2019-10-03 17:22 | Report Abuse

@DK66, Thank you for your effort, however I'm in doubt of your interest expense of USD44 millions for a CAPEX of 2.25 billions project. I guess it should be more than 100 mils especially the fund from China.

Posted by DK66 > 2019-10-03 17:43 | Report Abuse

The project is US$1.868b and it is financed by 75:25 debt equity ratio. US$1.4b loan was secured in Oct 2015. Note that the it is average interest expense for the entire 18 year loan period.

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andry_ong @DK66, Thank you for your effort, however I'm in doubt of your interest expense of USD44 millions for a CAPEX of 2.25 billions project. I guess it should be more than 100 mils especially the fund from China.
03/10/2019 5:22 PM

Posted by stockraider > 2019-10-03 18:50 | Report Abuse

No counting chicken b4 it hatch loh...!!

The power plant not producing any power n still under development loh...!!

Better to buy insas.....its chicken already hatch & inari already moving up loh....!!

Too much risk & uncertainty for jaks power plant mah...!!

Posted by Up_down > 2019-10-03 19:01 | Report Abuse

kyy lost 60 million in Jaks. Pengoreng have earned so much money in such a short time. They will come back one.

Posted by stockraider > Oct 3, 2019 6:50 PM | Report Abuse

No counting chicken b4 it hatch loh...!!

The power plant not producing any power n still under development loh...!!

Better to buy insas.....its chicken already hatch & inari already moving up loh....!!

Too much risk & uncertainty for jaks power plant mah...!!

Posted by stockraider > 2019-10-03 19:02 |

Post removed.Why?

Posted by Moore > 2019-10-03 19:03 | Report Abuse

Guys can share some proven trading strategies I can learn?

Posted by Up_down > 2019-10-03 19:08 | Report Abuse

Sometimes, we don't have to act smart in stock market. Stock market is an irrational place for people playing game...follow the trend will do. lolz

Posted by stockraider > Oct 3, 2019 7:02 PM | Report Abuse

just don be another sohai loh...!!

Posted by stockraider > 2019-10-03 19:10 |

Post removed.Why?

Posted by Up_down > 2019-10-03 19:17 | Report Abuse

Nothing is certain in the market for short and mid term. Don't be too confident in your word.

Posted by stockraider > Oct 3, 2019 7:10 PM | Report Abuse

Yes don have to act smart but better don be another sohai loh...!!

Posted by Up_down > 2019-10-03 19:25 | Report Abuse

But I hardly see kyy come back to goreng the same counter twice. lolz

Posted by Up_down > 2019-10-03 19:29 | Report Abuse

Practice of cutting loss until you don't have much feeling in loosing money.

Posted by Moore > Oct 3, 2019 7:03 PM | Report Abuse

Guys can share some proven trading strategies I can learn?

Posted by DK66 > 2019-10-03 19:29 | Report Abuse

You may have to wait for him to finish off Dayang first

Posted by DK66 > 2019-10-03 19:31 | Report Abuse

Laughable but true !

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Up_down Practice of cutting loss until you don't have much feeling in loosing money.

Posted by Up_down > 2019-10-03 19:39 | Report Abuse

The tricky part is how to maintain our confident while keep cutting lost.. It is, in fact, life torturing during the process and may have to endure it for years.

Posted by DK66 > 2019-10-03 19:42 | Report Abuse

Cut loss is never easy but vital survival strategy in stock market

Posted by Up_down > 2019-10-03 19:46 | Report Abuse

No easy life in stock market especially KLSE. The up and down cycle in a short period is really shaking our heads.

Posted by DK66 > 2019-10-03 19:47 | Report Abuse

Learn to invest prudently. Learn to read financial information. Learn to analyse available information. Learn to take calculated risks. Most importantly, learn how to source insider information. But whatever you do, don't listen blindly to strangers !

Posted by PotentialGhost > 2019-10-03 19:50 | Report Abuse

DK66, In Ricky Yeo opinion is I don't know . Ricky Yeo can't answer your question la DK66 Stop asking him again ,very no face

Posted by DK66 > 2019-10-03 19:52 | Report Abuse

I can't answer his question either. I suppose nobody has a right answer.

Is 10 a fair PE ? Well, one way to judge is to compare with the industrial average.

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PotentialGhost In Ricky Yeo opinion is I don't know . Ricky Yeo can't answer your question DK66. Haha
03/10/2019 7:47 PM

Posted by DK66 > 2019-10-03 19:58 | Report Abuse

Most importantly, learn how to source insider information. In this case, if you can get a copy of the Power Purchase Agreement on Hai Duong Power Plant, you know everything !

Posted by DK66 > 2019-10-03 20:10 | Report Abuse

Power plants under BOT contracts are protected by the PPA which has an element of Capacity payment which is paid to the plant operators regardless of anything; whether the plant is operating, output level, etc.

This is the minimum payment the plant operator will receive throughout the 25 years.