Initiate with BUY and MYR4.15 SOP-DCF based TP We like MFCB for its: i) potential returns from Don Sahong hydropower project in Laos; and ii) strong growth prospect from its Resources segment. Also, its net cash position as of end-2016 reinforces its balance sheet strength to take on the construction cost of Don Sahong. We value MFCB using the SOP method to derive our TP of MYR4.15 (+12%) with Don Sahong and its Resources segment making up the majority of its value.
1) Don Shahong Project is ahead of schedule around 3 months, and the first turbine is expected to be fired up by May 2019 (the testing will take another 2-3 weeks), after that every 2 months there will be another extra turbine come to operation. In short by 2019 June there will be some power concession income start coming in. Best still because the power concession contract only start by 1/1/2020, during this period there will be no depreciation & amortization expenses.
2) Resources division is foreseeing a double digit growth for the next few years, steady income.
3) Coconut plantation (Healthcare division) won’t able to see any solid income by 2022, however progressive planting is taking place at the moment.
Short term you won’t see any big surprises, but gradually the value will be slowly unlock.
yep, you are probably right. this stock worth to hold until 2019 and beyond then gets to see the real earnings potential.
2018 most likely won't be exciting, since tawau power plant is a no-go earnings for the immediate term would have some impact, in addition to higher interest expenses on the Usd loan.
I know it is not Don Sahong, just to be aware of what is happening now in Laos due to extreme wet weather conditions, Any way the unlucky dam project not far from Don Sahong and there will be definitely have some effects one way or another.
The authority may likely review the design and construction of dams that may involve some changes and may then have cost and time schedule implications.
Environmentalists that were critical on dams in Mekong River may use this unfortunate happening to justified their previous concerns. Just my thinking.
We refer to the above unfortunate incident that happened on 23 July 2018.
Following the incident, the Company has received queries from various stakeholders on the risk of a similar situation happening to the Company’s Don Sahong Hydroelectric Power Project (“Don Sahong Project”) and its implications thereof.
The Board of the Company has made the necessary enquiries with the management of Don Sahong Power Company (“DSPC”) and the Project consultants. Having reviewed the circumstances surrounding the incident and the specific and unique characteristics of the Don Sahong Project, the Board is satisfied that present and future dam safety risks remain low and are being (and will continue to be) appropriately monitored and managed in accordance with the industry and international best practices.
At this juncture, the Board concurs with the management of DSPC and its consultants that the incident is unlikely to result in any delay in the completion of the Don Sahong Project or a material change in the overall cost of the Project.
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Lohjunwei
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Posted by Lohjunwei > 2017-12-28 12:13 | Report Abuse
who is collecting?
window dressing?