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19 comment(s). Last comment by Sslee 2020-05-18 10:50

qqq33333333

3,053 posts

Posted by qqq33333333 > 2020-05-14 20:15 | Report Abuse

sslee



u think DK and the rest don't know meh? They all pretending only.




https://klse.i3investor.com/servlets/forum/600317771.jsp

Sslee

5,280 posts

Posted by Sslee > 2020-05-14 23:13 | Report Abuse

Dear all,
I make amend the IRR mathematic model refer to as share of FCF (Payment to equity holders)
Share of Net profit is different as share of FCF distribute to the shareholders.
FCF =Net profit + depreciation + interest payment – Loan payment of USD 109.712 million.

Posted by Philip ( buy what you understand) > 2020-05-14 23:24 | Report Abuse

Now this is a well written totally unbiased article.

Kudos Sslee.

In the absence of real concrete results, I believe it is safer to use the most conservative figure available. At least that way when the real results come up you can be pleasantly surprised instead of aggressive investing based on anticipated good results and very shocked.

Sslee

5,280 posts

Posted by Sslee > 2020-05-15 08:27 | Report Abuse

Good morning Philip,
Thank you.
When you put your thought on paper, you can see more clearly and make amend.
I still have a lot to learn.

Aseng

8,633 posts

Posted by Aseng > 2020-05-15 08:27 | Report Abuse

Dear Sslee,

Good morning

I know It is not my job to judge your work is good or bad
Since you begin with such a declaration

"Since I was Business Development Manager before and had work thro’ many project feasibility studies"


It is very dangerous to support your calculation with this news
https://klse.i3investor.com/blogs/kianweiaritcles/2019-07-08-story214175.jsp

and a challenge to verify the net income with the management during the AGM

Many careless readers will be easily misled into believing your last figure RM77. 61 is the total net profit of the business operation even though after the ammendments and your reminder it is not.

Sorry to tell early in the morning,
Very misleading playing with figures.

Sslee

5,280 posts

Posted by Sslee > 2020-05-15 10:08 | Report Abuse

Dear All,
If you use the 2019 AGM BOD share of profit RM (80-100) million or USD (19.37-24.21) million Exchange rate 4.13
Since FCF=Net profit + depreciation + interest expenses – Loan repayment of USD 109.712 million.

Then share of FCF for the end of first year (base on 30%). Exchange rate USD to MYR = 4.34
USD (19.37-24.21) + 1870X0.3/25 + 1402.5X0.06X0.3 - 109.712X0.3
USD (19.37-24.21) + 22.44 + 25.245 – 32.913
USD (19.37-24.21) + 14.77
USD (34.14-38.98)
RM (148.16- 169.17) million

Base on above using NPV with discount rate of 5% for inflation
NPV with 5% discount Sum (1/(1+0.05)^N). Where N= 1 to 25 is 14.0939
Hence base on NPV with 5% discount rate the 30% JHDP worth to JAKS is RM (148.16- 169.17) X 14.0939 million
=RM (2,088 – 2,384) million

Thank you

qqq33333333

3,053 posts

Posted by qqq33333333 > 2020-05-15 10:24 | Report Abuse

AT 25 June 2019 the USD to MYR is 4.13 thus base on today rate of 4.34 the BOD say 30% will contribute RM 4.34/4.13 x (80-100) = RM 84 - 105 million.

so is it 84-105 or 148-169?

Sslee

5,280 posts

Posted by Sslee > 2020-05-15 10:26 | Report Abuse

haha qqq3,
One is share of net profit the other one is share on FCF

qqq33333333

3,053 posts

Posted by qqq33333333 > 2020-05-15 10:28 | Report Abuse

and which is which?

Sslee

5,280 posts

Posted by Sslee > 2020-05-15 10:33 | Report Abuse

Haha qqq3,
You can make a good guess. But no prize for correct answer.

qqq33333333

3,053 posts

Posted by qqq33333333 > 2020-05-15 10:46 | Report Abuse

so 84 - 105 is profits?

that sounds reasonable to me.

qqq33333333

3,053 posts

Posted by qqq33333333 > 2020-05-15 10:54 | Report Abuse

so 100 million on 600 million shareholder fund , that is 16% accounting rate of return for first year...that also sounds about right............

qqq33333333

3,053 posts

Posted by qqq33333333 > 2020-05-15 11:10 | Report Abuse

so 100 m profits based on management guidance?

DK66

4,269 posts

Posted by DK66 > 2020-05-16 18:10 | Report Abuse

Dear Sslee,

Based on the following calculation, what would be the net profit to Jaks ?

-----------------------------
Equity USD1870 X 0.25 = USD 467.5 million

ZERO = - 467.5 + A1/(1+0.12) +A2/(1+0.12)^2+……………till A25/(1+0.12)^25

USD 467.5= 7.8431A thus A= USD 59.606 million

Equity payback period of 467.5/59.606= 7.8 years

30% to JAKS = USD 59.606 x 0.3 = USD 17.882

Base on USD: MYR of 4.34: JAKS share of FCF RM 17.882 x 4.34= RM 77.61 million.

apple4ver

20 posts

Posted by apple4ver > 2020-05-18 00:36 | Report Abuse

"..75% loan is taken care of by capacity payment" implies that at minimum the capacity payment would cover both interest and principal loan payment. Bear in the mind however different source of loan carries different interest rate. At low end, those loans from development banks probably cost much less than 5% interest rate while loans from Vietnamese banks have interest rate in low teens (Interest rate in Vietnam was around 8-15% during the earlier years of 2010s). Private equities loans? Probably in high teens... What does that mean? If you run a policy guaranteeing loan but not equity, you risk gamification by investors (Max loan, indiferrence to interest rate (government pays mah)). Net results is negative to government due to higher tariff rates.

The alternative is to set the project IRR to 12%. What the government want is to get investors to invest. And quickly. A project IRR of 12% in fact looks unattractive in an environment where interest rate was around 8-15% given the long gestation period. Hence, the many side incentives: USD tariff payment, guaranteed buyer, capacity payment, hedge from coal price fluctuation, etc.. Yes, the equities IRR of 27% would look ridiculously high but that is more to leverage than other things. Flip the ratio to 75% Equity 25% loan, the equity IRR drops to mere 14%...

Sslee

5,280 posts

Posted by Sslee > 2020-05-18 10:04 | Report Abuse

Dear DK66,
I have not come across any feasibility study report given out at any trade promotion organized by foreign country investment mission with Equity IRR calculation. All are base on total project cost IRR.

qqq33333333

3,053 posts

Posted by qqq33333333 > 2020-05-18 10:24 | Report Abuse

Posted by Sslee > May 15, 2020 10:08 AM | Report Abuse

Dear All,
If you use the 2019 AGM BOD share of profit RM (80-100) million or USD (19.37-24.21) million Exchange rate 4.13
Since FCF=Net profit + depreciation + interest expenses – Loan repayment of USD 109.712 million.
======

FCF no need add back interest lah....

Sslee

5,280 posts

Posted by Sslee > 2020-05-18 10:50 | Report Abuse

Haha qqq3,
Interest expense is tax deductable hence net profit mean profit after tax, depreciation and interest.
By the way FCF on one hand you add back interest expenses but deduct the loan repayment (Principal plus interest) so interest is zero sum gain in FCF.

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