Hng33, it is not advisable to place too much emphasis and reliance on the valuation derived in this article as the validity of the assumption used is highly debatable. It merely serves to prove that the power plants under BOT in Vietnam are highly profitable.
i3value, The project cost and financing structure is very similar to JHDP. The PATNCI is already the Net profit after tax. ----------------- i3Value DK, 221m or 295m is GP only isn't it? Still have to take into account local expenses and finance costs before calculating EPS 03/03/2020 12:02 PM
If JHDP 30% ownership is only worth RM0.70 to Jaks, and if the 70 sen is derived using PE of 10, it means it is only expecting 7 sen or RM45m annual profit from JHDP. Hence, JHDP will only earn RM152m (USD36m) a year, and total of USD900m for 25 years
In other words, after investing USD1870m in JHDP, it will only generate a total net cash flow of USD2770m (1870+900) for 25 years. This is a total of merely 48% return over 25 years, equivalent to a compound return of about 1.5%. Is this a good investment decision ?
Hi DK66, thanks much for sharing. just 1 question, from what you've mentioned above 100% Vinh Tan 1 PAT = RMB553 / 45% = RMB1,230m should it be divided by 55% instead of 45%? since the ownership you've mentioned above is 55%.
liewtz06, because the RMB553m is the portion attributable to the 45% NCI (100%-55%). I have to add back the PATNCI of 2018 because the prorate amount of RMB497m represents the INCREASE in PATNCI.
----------------------- liewtz06 Hi DK66, thanks much for sharing. just 1 question, from what you've mentioned above 100% Vinh Tan 1 PAT = RMB553 / 45% = RMB1,230m should it be divided by 55% instead of 45%? since the ownership you've mentioned above is 55%. 03/03/2020 3:02 PM
liewtz06 Also, after the projection of 12 months PATNCI by /9 x 12 using 9 months results, why add another 53M which made the calculation based on 12 + 1 = 13 month? Kindly seek your clarification.... thanks! 03/03/2020 3:05 PM
Posted by hng33 > Mar 3, 2020 11:29 AM | Report Abuse
DK66, please notify OTB to use your figure above to seek confirmation with Jaks CEO when they have meeting next week. Thanks
Posted by hng33 > Mar 3, 2020 11:46 AM | Report Abuse
OK, hope OTB can publish too estimation derive from Jaks CEO expectation profit on IPP after meeting. ----------------------- Ans: I had read all DK66's reports until I can memorize them. I carry all the notes to attend the meeting. Please note that I am a detail person, no worry. Thank you.
@liewtz06, i think you can see it this way from the below data: .......................................................
Vinh Tan 1 is 55% owned by China Southern Power Grid
The PATNCI of China Southern Power Grid for 9 months ended 30th Sept 2019 was RMB 1,127m ( 9 months 2018 : RMB754m)
The PATNCI of China Southern Power Grid for 2018 which is attributable to Vinh Tan 1 was RMB56m .......................................................
PATNCI of China Southern Power Grid for 9 months ended 30-09-2019 RMB 1,127m...(1)
PATNCI of China Southern Power Grid for the last 9 months in 2018 ended 31-12-2018: RMB 754m
Deduct the RM45m contributed by Vinh Tan 1 at end of 2018 RMB 709m.....(2)
As such, (2) is without Vinh Tan 1 contribution and (1) is with Vinh Tan 1 contribution for a 9 months period (with +/- potential contribution from others which is assumed zero - which is a fair neutral assumption).
The changes , i,e difference between (2) & (1) is then the PATNCI from Vinh Tan 1 contribution for 9 months = RMB 418m
12 months prorated contribution would be = RMB 557m
Since PATNCI holds 45% stakes, at 100% stakes Vinh Tan 1 PAT would be: = (100/45)*(RMB 557m) = RMB 1238m = RM 743m
at JAKS 30% and 40% stakes it would be RM 222m and RM 297m respectively.
I wish to show you the below calculation how I can get RM 248 million.
The cumulative power sales of Vinh Tan 1 were 8.194 billion kwh based on annual 7,238 utilization hours.
Since Hai Duong power plant is the same spec as Vinh Tan 1, I will assume same cumulative power sales were 8.194 billion kwh. Profit margin is USD 0.024 (2.4 USD cents). USD to RM conversion is 4.20. Jaks owns 30% stake.
Calculation = 8,194 * 0.024 * 4.20 * 30% = RM 248 million. This profit is tax free. EPS = 248/651 = 0.38 If PER = 10, the target price is 3.80 in 2021. If PER = 15, the target price is 5.70 in 2021.
Hi Dk...the estimated earning of Vinh Tan1 from the other article ( Average valuation of Jaks Hai Duong Power Plant ) is rm287m to rm290M (30 to 40%) . Is the assumption different here or i miss out something ? Tks
Edkfc, although the valuations derived in "Jaks Resources - Higher Expected Investment Returns from JHDP ?" and this article are both using data from Vinh Tan 1. However, different bases and assumptions were used . The former combines data from vietnam government, management guidance and Vinh Tan 1 utilization hours to arrive at the valuation. This article extract Vinh Tan 1 results from abbreviated results of its holding company by assuming the increase in profit attributable to NCI in 2019 was entirely pertaining to Vinh Tan 1.
Even though wild assumptions were made in both cases, the results were not vastly different. This suggests that Power plants under Vietnam BOT contracts are very lucrative.
Tks DK...the BOT contracts is indeed extremely lucrative. We were told during last yr AGM that the Viet government would not issue such lucrative contract anymore ! Jaks and their investors are so fortunate.
Yes, they all have the same BOT contracts and their PPAs are very similar, if not identical. By right, Mong Dong II should be a closer resemblance to Jaks as their BOT and PPAs were the first 2 signed and Vinh Tan was sealed a year later. However, both Vinh Tan 1 and JHDP are using chinese technologies while Mong Duong II is using American technology.
Chinese thermal power technology has out grown Western technology. Mong Duong II was operating at 33-34% efficiency whilst chinese technology can achieve 36-38% efficiency for sub-critical design. As I have said, plant efficiency is an important determinant of profitability.
Therefore, I would say Vinh Tan 1 would be a closer match for JHDP.
Hope I have explained well.
----------------- newbie8080 @DK66 This blog still apply if Vinh Tan 1 is closest?
The article on Mong Duong II, however, revealed an important information about the capacity payment. I would expect all the 3 power plants to have very similar capacity payment which is not affected by operating efficiency. However, energy payment is highly dependent on plant load factor, plant availability, and plant efficiency.
DK 66, Have you research this Banten power plant (indonesia) before?
In 2013, power company PT Lestari Banten Energi (part of the Genting group) was seeking to finance a USD 998m project to build a 660MW coal-fired power plant in Banten, West Java, Indonesia. The power plant (“Banten”) is due to commence production in 2017, and leverages best-in-class technology combined with high energy efficiency. The company signed a 25-year power purchase agreement (PPA) with state offtaker PT PLN Persero (PLN) to purchase 100% of the project output.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....