Very good flow diagram, hope some other counters have somebody like DK to give us info. Only info missing is the quantum; this could impact the viability of the BOT contract. My experience (not as knowledgeable as DK) of EPCC, EPCIC and BOT contracts, excuse me if opinion NOT agreeable, usually more advantageous to the main contractor. The main contractor (for B portion) will has all the 'juices' and left the 'bones' to the sub-contractor. Is JAKS consider part of the main contractor (equal partner)? For BOT contract, usually at the end where the plant transfer (T portion), the plant will be at very bad condition due to operator (O portion) maximize for profit. I believed the quantum will play a part for the upgrade of the plant to guarantee the plant in good condition upon the transfer. I give my opinion for sharing purpose only and not to degrade any counters or buy or sell call. Happy Trading
Thanks DK, I have being following your write-up and JAKS quite awhile, and gain alot of knowledge. There are many JV contracts with one supplying all the materials and workmen; and the other just doing minor groundworks. That's why I used the word "equal partner". If the profit is share equally based on capital engagement, then JAKS has nothing to lose. Otherwise, it just benefit the 'tai kor' (big brother). Happy Trading
As far as construction profit is concerned, we know that Jaks is likely to gain around RM440m from the USD454m EPC contract works which were fully subcontracted to a subsidiary of CEEC.
As for operation profit, it will be shared base on ownership.
DK, I am refering to both. The construction profit should be already 'in the pocket' for the first power plant (train). I read some where JAKS only do groundworks. Therefore, I presume the profit also include for the 2nd train. As mention by @Sslee and confirmed in your flow chart, the operation 'profit' shall be by dividend only upon declaration. I wonder how this 'profit' shall be reported? I have nothing against JAKS and try to justify how to include JAKS in my portfolio..
Blee, Jaks secured the power plant from the vietnam government. It has an upper hand in bargaining for share of construction profit when CPECC was selected by Jaks as his partner.
@DK, many thanks. I am very clear on your flow chart. The capacity payment will partly fund the shut down (inclusive of manhours and equipment, etc) and others upkeep. TQ again
DK, it's important to know what is the JHDP's dividend (and repatriation policy) and JAKS's dividend policy. If unable to know both, depends how good is your guessing game.
sosfinance, JHDP's distribution policy is likely to follow Mong Duong II which is to distribute all idle cash to its shareholders as per its shareholder agreement. 100% USD foreign exchange and repatriation is guaranteed by the Vietnam Government. However, Jaks has no formal dividend policy yet.
----------- sosfinance DK, it's important to know what is the JHDP's dividend (and repatriation policy) and JAKS's dividend policy. If unable to know both, depends how good is your guessing game. 22/12/2020 10:34 PM
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edkfc
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Posted by edkfc > 2020-12-22 11:57 | Report Abuse
Tks DK, you made it super clear and simple. More importantly this contract is just amazing and gives guaranteed returns to Jaks for 25yrs !!!