Powergen contracts are based on IRR . This follows from US and western models which were then benchmarked to World Bank methods of drawing up contracts. World Bank methods had become the defacto standard worldwide and for Vietnam case its 10% IRR 10% IRR is based on approved capex by Vietnam which may or may not be same as per accounts capex shown in Jaks audited accounts.
all these are whatcamacallits These are actually efficiency bases to make sure operator performs well to agreed standards before the 10% IRR are paid out.
essentially whatever you do has no effect at all. you will only get 10% IRR unless you screw up big time thats where all these parameters like heat rate, up time, plant conversion efficiency are all methods used as incentives for plant operator to perform well.
ass_u_me a block of coal has 100 units of energy ass_u_me Vietnam contract says must achieve 32% efficiency if you achieve less than 32% efficiency you will suffer penalties making your IRR less than 10% if you achieve more than 32% efficiency you will enjoy incentives making your IRR more than 10%
the contract terms can vary between 32% to 42% depending on plant design and nego skill. Typical China efficiency is 40.9%
different plants have totally different designs different base efficiency per contract example Plant A contract base efficiency is 32% example Plant B contract base efficiency is 40% and the heat path can be totally different.
basing your profits on another power plant means said person have totally no idea how power plant contracts are signed and revenue generated.
Jaks share of profit of JV quarter end 31 March RM 33,936,000. So per year will be RM 135,744,000.
From author: Note that Jaks' 30% sharing from JHDP capacity charges per annum alone is RM170m (565 x 30%) = EPS RM0.083
Jaks' 30% sharing from JHDP capacity charges per quarter 170/4= RM 42.5 million. Thus Jaks management must have under report the quarter share of profit by RM (42.5-33.94) RM 8.56 million on capacity charge alone. So that about right the money must had gone to someone else pocket.
"Despite the increased contribution from its associate, we believe that there is still upside to this, given the spill-over of the maintenance charged during the quarter, while most of the work was completed in 4Q21" -- Affin
@Sslee, there was a fire incident in one of the 2 turbines from Q4 21. Assume 1 turbine down for 1 month, then 34m/5*6 = 41m. Which is very close to DK's calculation.
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....
SomaCruz89
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Posted by SomaCruz89 > 2022-05-31 10:13 | Report Abuse
Thanks DK for the sharing!