Posted by DK66 > 2020-03-14 00:35 | Report Abuse

Dannie, Thanks for your 1st like

Posted by johnmasino > 2020-03-14 06:56 | Report Abuse

Great article bro! Keep up the good work!

Posted by Kohcl8 > 2020-03-14 08:13 | Report Abuse

I don’t think the computation here is correct as the PPA would have the targeted efficiency for the IPP to achieve. The off taker would most likely allow a 4% point differential over the 25 years. So the 24.4% savings does not work unless the PPA is different as I doubt so.

Posted by DK66 > 2020-03-14 09:19 | Report Abuse

I won't be free until tonight. Shall explain later. Thanks

Posted by probability > 2020-03-14 11:08 | Report Abuse

@DK66, actually you can also derive the exact numbers above using the project IRR of 12% guided by the management.

Perhaps on your next article you can do just that. Ensure that the first recurring cash in flow (25 years) happens approximately on the 4th or 5th year from the project initial out flow of cash being year zero.

Refer 'Economic-cost benefit analysis' on Page 63-64 below for Mong Duong 1 as a guide how the cash out flow & in flow takes place in sequence through the years - of the thermal power plant's economic life.

"Viet Nam: Mong Duong 1 Thermal Power Project"

https://www.adb.org/sites/default/files/project-documents/39595/39595-013-pcr-en.pdf

The cash outflow of US$ 1.87 Billion during EPCC phase (first 4-5 years) before COD can be proportional split as per the table shown on above pages.

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

You will realize the payback with this cash flow is also 8 years as per management guidance.

Perhaps that will clear market skepticism on JAKS power plant earnings once and for all this way.

TQ

Posted by OTB > 2020-03-14 11:11 | Report Abuse

Posted by probability > Mar 14, 2020 11:08 AM | Report Abuse

@DK66, actually you can also derive the exact numbers above using the project IRR of 12% guided by the management.

---------------
I think Hai Duong power plant is higher spec than Vinh Tan 1, hence we should use 7,238 utilization hours instead of 6,500 hours to calculate.
Thank you.

Posted by probability > 2020-03-14 11:28 | Report Abuse

correct my post above - use Page 66.

......

The cash outflow of US$ 1.87 Billion during EPCC phase (first 4-5 years) before COD can be proportional split as per the table shown on above page 66.

Posted by probability > 2020-03-14 11:32 | Report Abuse

@OTB you are right, at 7238 hrs utilization rate , the IRR will shoot to 15%, mid teens like the management had guided Public Investment Bank earlier in 2017.

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

Source Public Investment Bank Berhad, January 10 2017.

Jaks, together with CPECC, is constructing a BOT power plant, with an estimated cost of US$1.87bn with 25 years’ concession and power purchase agreement with Viet Nam Electricity (EVN). US$1.4bn already secured back in September 2015 from Industrial and Commercial Bank of China, China Construction Bank Corporation and Export-Import Bank of China. The JV has US$160m capital (equity portion) and expects the remaining balance of US$307.1m to be injected in the next 3 years. Management expects strong IRR in the mid-teens with the first unit expected to be completed by mid-2020, and the second unit 6 months later.”

Posted by probability > 2020-03-14 11:47 | Report Abuse

IPP return is real, even if it is not utilized as for the case of Indonesian Coal Fired power plant under BOT contract:

http://ieefa.org/wp-content/uploads/2017/08/Overpaid-and-Underutilized_How-Capacity-Payments-to-Coal-Fired-Power-Plants-Could-Lock-Indonesia-into-a-High-Cost-Electricity-Future-_August2017.pdf


Extract from Page 12 - 13 below:
....

To this end, IPP participation has been instrumental in expanding power generation capacity in Indonesia, although this expansion has been accomplished at a significant cost.

The PPA with Paiton Energy (which operates a 2,035MW coal-fired power plant) in 1991 has a project internal rate of return (IRR) of between 20% and 25%.

Later coal power projects, those that achieved financial close from 2005 to 2009, such as Cirebon (660MW) and the Tanjung Jati expansion (2 x 660MW) have IRRs of between 12% and 14%.

In general, equity return for investors is higher than project IRR. The Indonesian government effectively guaranteed this return through capacity payment. The high IRR attained in earlier years was commensurate with the political and commercial risk of investing in Indonesia, but the track record shows how much Indonesia has had to pay in order to kick-start and sustain the IPP momentum

Posted by Beary > 2020-03-14 12:03 | Report Abuse

Oldman broke his own golden rules when he invested in jaks.

He got KOed blue black by alp.

Now OTB also breaks his own TA first FA second rule when investing in jaks.

Will history repeats itself?

Will otb also ends up walloped by alp?

Is jaks so special until self proclaimed sifools willing to break their own rules?

Posted by probability > 2020-03-14 12:05 | Report Abuse

beary, focus on the numbers man...why people...

"people may lie..but numbers dont"

Posted by Beary > 2020-03-14 12:06 | Report Abuse

Probability....people are alive, numbers are dead.

People can manipulate numbers.

Posted by probability > 2020-03-14 12:09 | Report Abuse

mechanism for the numbers derivation cannot be 'lied'....trust the logic behind it.

trust logics - not hearsay

Posted by Beary > 2020-03-14 12:18 | Report Abuse

Anyway, my guess is otb has already bailed out on thursday.

He now only pretends he is still in it to avoid being called a liar and unprincipled.

My guess only otb, don't curse me or I will bear curse you back.

Hahahaha.

Posted by Beary > 2020-03-14 12:25 | Report Abuse

There is a possibility that the price push up yesterday was by the oldman after sensing otb has abandoned ship.

You all know what a nasty and vengeful person the oldman is.

Oldman is the type who will cut his nose to spite his face.

Posted by probability > 2020-03-14 12:29 | Report Abuse

Beary, though i dont admit i agree with all your statements, i must admit you are an intelligent forumer that i3 needs.

Intelligent Devil's advocate are always appreciated. hahaha...

TQ

Posted by Beary > Mar 14, 2020 12:25 PM | Report Abuse

There is a possibility that the price push up yesterday was by the oldman after sensing otb has abandoned ship.

You all know what a nasty and vengeful person the oldman is.

Oldman is the type who will cut his nose to spite his face.

Posted by pjseow > 2020-03-14 12:41 | Report Abuse

i3lurker, you should read both articles in order to understand how DK arrived at the earnings of capacity payment for Duong Mong II. The other report is titled Peer Comparison.with Duong Mong ii.
Based on DK formula
Earning = Capacity payment.- loan receivable repayment - interest expense

I did not see DK consider the principal loan repayment as
earning.
On the contrary, he rightly minus the loan repayment in the above formula because the capacity payment.of US 253 million.paid by Vietname government already included loan repayment or principal repayment.

Posted by edkfc > 2020-03-14 14:17 | Report Abuse

DK 66.....Thanks again DK, you have nailed it , again and again. We now have 2 solid actually running coal power station right in Vietnam (one built by CPECC group, imagine that ) to derive all important data..efficiency, earning. Its more than good enough. TQ again.

Posted by edkfc > 2020-03-14 14:22 | Report Abuse

Probability....Thankyou too for sharing your indepth knowledge and experience. Always encouraging even in the worst of time like this past wk !!! Mind sharing a bit of your background.....not obligated but appreciated. Tks

Posted by probability > 2020-03-14 14:31 | Report Abuse

corrected interpretation:

Incase any layman does not understand the above, let me explain:
...............................................................

The "agreed heat rate" of 9795 BTU per kWh in 2016 means that if the Mong Duong power plant produced say 10 Million Kwh of electricity in 2016, EVN will assume that the plant had consumed Coal equivalent to:

= (9795 BTU/1kWh) * (10M kWh)
= 97,950 Million BTU

1 ton Coal has 20 Million BTU, as such EVN will pay for:

= (97,950/ 20)
= 4,900 ton Coal at its cost
...............

Now, for Mong Duong plant to really consume 4,900 ton coal to produce 10 Million kWh, the plant has to be operating at 34% efficiency. Will show you here, how to derive that:

From above we can see that 4,900 ton coal produces 97,950 Million BTU.
BTU is just unit for energy and it can be converted to kWh with the conversion factor of 3412 BTU per 1 kWh.

As such, the 97,950M BTU is equivalent to 28.7M kWh.
But the plant only produced 10M kWh right?

So the efficiency of the plant is:
= 10M kWh energy produced /28.7 kWh energy consumed
= 34.8% efficiency
.................

So, as DK66 mentioned above, any actual efficiency of the new Chinese thermal plant (e.g Hai Duong) higher than 34.8% presents a lesser actual coal consumption than the theoretical quota EVN had agreed with Mong Duong 2...

DK66 showed Hai Duong thermal power plant having the Chinese thermal power plant efficiency of 43% , represents fuel cost savings of 24.4% (from revenue of USD 343M) which will result as pure savings or additional profits of US$ 84M to Hai Duong power plant relative to Mong Duong 2 power plant.

Posted by OTB > 2020-03-14 14:37 |

Post removed.Why?

Posted by i3Value > 2020-03-14 14:52 | Report Abuse

Beary, irresponsible statement. You making guess (you admit) with no evidence. Yet tell OTB not fight back. You not fair to OTB. You are keyboard warrior, poor character, say things as you suka-suka.

I not OTB subscriber. I say this because you act with no responsibility toward people’s integrity.

—————

Posted by Beary > Mar 14, 2020 12:18 PM | Report Abuse

Anyway, my guess is otb has already bailed out on thursday.

He now only pretends he is still in it to avoid being called a liar and unprincipled.

My guess only otb, don't curse me or I will bear curse you back.

Hahahaha.

Posted by gohkimhock > 2020-03-14 16:43 | Report Abuse

another Jaks article again zzz.. Happy conning and duping, dude.

to all those potential victims out there, Jaks is no Tenaga, Malakoff or even near MFCB.

Posted by enigmatic ¯\_(ツ)_/¯ > 2020-03-14 16:46 | Report Abuse

I have no idea whatsoever on JAKS, but calculation wise, don't you think 4.2 USD/RM may be a bit too optimistic? RM may bounce back anytime.

Posted by qqq33333333 > 2020-03-14 16:48 | Report Abuse

kyy?... kyy looks like the type who don't do things half way.... sell means sell all and becomes worse stock in the world..... thing kyy has are best things in the world according to him.

Posted by probability > 2020-03-14 16:50 | Report Abuse

@GKH, your OKA will definitely break 80 cents again - since no one is conning and duping and promoting.

Posted by gohkimhock > 2020-03-14 16:58 | Report Abuse

Heng Yuan = Nestle ??

**yawn**

tips: some counters are destined to have low PE all their life. Dont PE x 10. This is not right.

Posted by qqq33333333 > 2020-03-14 16:58 | Report Abuse

as for Jaks.............look at the shareholders list lah.......

all retail kakis only............

u think all institutions dumb dumb one meh?

Posted by probability > 2020-03-14 17:05 | Report Abuse

Thats tibet monk raider's quote. How does it fit here?

Posted by gohkimhock > Mar 14, 2020 4:58 PM | Report Abuse

Heng Yuan = Nestle ??

Posted by SarifahSelinder > 2020-03-14 17:25 | Report Abuse

After d briefing stil mcm ni stil fluid je wat is d point of going for d briefing??

Posted by SarifahSelinder > 2020-03-14 17:27 | Report Abuse

Salah JAKS IR or wat???

Posted by SarifahSelinder > 2020-03-14 17:27 | Report Abuse

Worst off worst off

Posted by RainT > 2020-03-14 17:32 | Report Abuse

not manage to get 69 sen

Posted by SarifahSelinder > 2020-03-14 17:32 | Report Abuse

Yg only hope is OTB really has dealt wit d briefing adequately kat si n yg cara ni is menang d same way JAKS IR has entertained PBB IB analysts u know like 0 info n updates so tat PBB is in fact punishing JAKS wit TP of 1.13

PBB TP 1.13 in d dark

Posted by SarifahSelinder > 2020-03-14 17:36 | Report Abuse

Similarly in d dark PBB IB give low 1.13 TP

Posted by DK66 > 2020-03-14 20:57 | Report Abuse

Pjseow, Thanks for explaining on my behalf. Save me the trouble.

-------------------
pjseow i3lurker, you should read both articles in order to understand how DK arrived at the earnings of capacity payment for Duong Mong II. The other report is titled Peer Comparison.with Duong Mong ii.
Based on DK formula
Earning = Capacity payment.- loan receivable repayment - interest expense

I did not see DK consider the principal loan repayment as
earning.
On the contrary, he rightly minus the loan repayment in the above formula because the capacity payment.of US 253 million.paid by Vietname government already included loan repayment or principal repayment.
14/03/2020 12:41 PM

Posted by DK66 > 2020-03-14 20:58 | Report Abuse

Probability, Thanks for your further explanation. It make my point clearer.

Posted by DK66 > 2020-03-14 21:02 | Report Abuse

enigmatic, Malaysia's GDP growth depends largely on export. Ringgit needs to remain competitive. Chances are we are going to weak ringgit going forward. in any case, ringgit exchange rate is not a major issue to JHDP.

----------------
enigmatic ¯\_(ツ)_/¯ I have no idea whatsoever on JAKS, but calculation wise, don't you think 4.2 USD/RM may be a bit too optimistic? RM may bounce back anytime.
14/03/2020 4:46 PM

Posted by DK66 > 2020-03-14 21:22 | Report Abuse

johnmasino & edkfc, You are welcome
------------
johnmasino Great article bro! Keep up the good work!
14/03/2020 6:56 AM

edkfc DK 66.....Thanks again DK, you have nailed it , again and again. We now have 2 solid actually running coal power station right in Vietnam (one built by CPECC group, imagine that ) to derive all important data..efficiency, earning. Its more than good enough. TQ again.
14/03/2020 2:17 PM

Posted by DK66 > 2020-03-14 21:23 | Report Abuse

Kohc18, I used the targeted efficiency (agreed heat rate) of Mong Duong II as benchmark.

---------
Kohcl8 I don’t think the computation here is correct as the PPA would have the targeted efficiency for the IPP to achieve. The off taker would most likely allow a 4% point differential over the 25 years. So the 24.4% savings does not work unless the PPA is different as I doubt so.

Posted by DK66 > 2020-03-14 21:26 | Report Abuse

probability, Thanks for the info. I will look into it

--------------
probability @DK66, actually you can also derive the exact numbers above using the project IRR of 12% guided by the management.

Perhaps on your next article you can do just that. Ensure that the first recurring cash in flow (25 years) happens approximately on the 4th or 5th year from the project initial out flow of cash being year zero.

Refer 'Economic-cost benefit analysis' on Page 63-64 below for Mong Duong 1 as a guide how the cash out flow & in flow takes place in sequence through the years - of the thermal power plant's economic life.

"Viet Nam: Mong Duong 1 Thermal Power Project"

https://www.adb.org/sites/default/files/project-documents/39595/39595-...

The cash outflow of US$ 1.87 Billion during EPCC phase (first 4-5 years) before COD can be proportional split as per the table shown on above pages.

Posted by DK66 > 2020-03-14 22:36 | Report Abuse

I agree, 7238 utilization hours should be a closer production figure.

However, we do not know the actual utilization hours of Mong Duong II to generate USD343m revenue in 2019.

So, for the purpose of this article, utilization hours cannot play its role in the profit estimation for JHDP.

-------------
OTB Posted by probability > Mar 14, 2020 11:08 AM | Report Abuse

@DK66, actually you can also derive the exact numbers above using the project IRR of 12% guided by the management.

---------------
I think Hai Duong power plant is higher spec than Vinh Tan 1, hence we should use 7,238 utilization hours instead of 6,500 hours to calculate.
Thank you.
14/03/2020 11:11 AM

Posted by DK66 > 2020-03-14 23:07 | Report Abuse

Those who has read this article and agree with the computation, please press "like" so that I know how many actually agree with me.

Posted by i3lurker > 2020-03-14 23:15 | Report Abuse

coal plant efficiency is just basic thermodynamics.

coal plant efficiency is a function of plant utilisation rate.
low utilization => 33% efficiency
100% utilization => depends on type of coal plant, see below

efficiency is from around 33% and upwards, max possibly 48%,
above that it is practically impossible at low costs, commercially.

its chemical energy to rotational kinetic energy to electrical energy.

so much is lost at every stage, heat loss, friction loss and magnetic loss.

bulk of the energy is lost at the heat stage

From website: -

Coal based power accounts for almost 41 % of the world’s electricity generation. Coal fired power plants operate on the modified Rankine thermodynamic cycle.The efficiency is dictated by the parameters of this thermodynamic cycle.

The overall coal plant efficiency ranges from 32 % to 42 %. This is mainly dictated by the Superheat and Reheat steam temperatures and Superheat pressures.

Most of the large power plants operate at steam pressures of 170 bar and 570 °C Superheat, and 570 ° C reheat temperatures. The efficiencies of these plants range from 35 % to 38 %.

Super critical power plants operating at 220 bar and 600/600 °C can achieve efficiencies of 42 %.

Ultra super critical pressure power plants at 300 bar and 600/600 °C can achieve efficiencies in the range of 45% to 48 % efficiency.

Posted by probability > 2020-03-14 23:16 | Report Abuse

well said i3lurker

Posted by i3lurker > 2020-03-14 23:20 | Report Abuse

essentially the plant design limits the efficiency that is obtainable

in real life its

either

- 33 to 38

or 33 to 42

or 33 to 48

you just cannot break pass the caps of 38, 42 or 48 for the different designs. It is impossible to happen.

Posted by DK66 > 2020-03-14 23:30 | Report Abuse

It is a fair statement from i3lurker. In fact, this is taken care of by the agreed heating value. I mentioned above that composition of the heating value is unknown. The agreed heating value is higher than the actual cost per Btu of coal. This is done through higher allocation ratio of heating value to cost per Btu of HFO. HFO is costlier than coal. This is to ensure sufficient profit to IPP operators if they are asked to operate at lower load factor.

Posted by DK66 > 2020-03-15 00:02 | Report Abuse

I have refined the article to make it more comprehensible.

Posted by qqq33333333 > 2020-03-15 00:16 | Report Abuse

there will be a peak and then come crashing down again.... Max period 3 months

Posted by qqq33333333 > 2020-03-15 00:17 | Report Abuse

copy and paste above