Posted by johnswj90 > 2020-04-14 11:04 | Report Abuse

DK66, I would like to seek your opinion on the depreciation calculation for this plant, whether will it be a straight line 25 years with no recovery cost or the company can recover a certain residual amount after 25 years based on the BOT contract.

Posted by 2721 > 2020-04-14 11:17 | Report Abuse

confirmed banker on duty today..engine on

Posted by DK66 > 2020-04-14 11:32 | Report Abuse

johnswj90, under the new accounting standard, the construction costs will no longer be recognised as concession assets hence amortised/depreciated over the concession period. Instead, the costs is recorded as "loan receivables" and gradually reduced (by capacity payment) over the concession period.

At the end of the concession period, the power plant will be transferred to the Vietnam government free of charge.

-------------------------
johnswj90 DK66, I would like to seek your opinion on the depreciation calculation for this plant, whether will it be a straight line 25 years with no recovery cost or the company can recover a certain residual amount after 25 years based on the BOT contract.
14/04/2020 11:04 AM

Posted by qqq33333333 > 2020-04-14 11:41 | Report Abuse

by DK66 > Apr 14, 2020 11:32 AM | Report Abuse

Instead, the costs is recorded as "loan receivables" and gradually reduced (by capacity payment) over the concession period.
========


that is bad news for u.........now capacity payment cannot take to PL account..........

cash flow problems..............Jaks got huge cash flow problems for 2020............now, whole world also cash flow problems...makes it even more difficult to solve its cash flow problems which is normally solved by private placement..........................

Posted by Sslee > 2020-04-14 11:47 | Report Abuse

In jaks book only need to record as non current asset associate company.
P&L share of profit from associate company.
In operation cash flow deduct as non cash flow items.
Only dividend received from assoociate company will be add on to cash flow.

Posted by DK66 > 2020-04-14 11:51 | Report Abuse

This is not bad news. You must understand that the costs will only be recorded as "loan receivables" upon power plant COD, not now.

Portion of the capacity payment will be recognised in the book as Repayment of loan receivables, and balance will be recognised as Interest income in P/L.

-----------------------
qqq33333333 by DK66 > Apr 14, 2020 11:32 AM | Report Abuse

Instead, the costs is recorded as "loan receivables" and gradually reduced (by capacity payment) over the concession period.
========


that is bad news for u.........now capacity payment cannot take to PL account..........

cash flow problems..............Jaks got huge cash flow problems for 2020............now, whole world also cash flow problems...makes it even more difficult to solve its cash flow problems which is normally solved by private placement..........................
14/04/2020 11:41 AM

Posted by qqq33333333 > 2020-04-14 11:59 | Report Abuse

cashflow problems.............eventually big eat small...........that is the law of the jungle and law of businesses.............

Posted by kanzaki123 > 2020-04-14 12:27 | Report Abuse

Breaking out ooo lai lai

Posted by 2721 > 2020-04-14 12:30 | Report Abuse

yea yea..lets c can break 1.04 today or nt

Posted by SomaCruz89 > 2020-04-14 12:47 | Report Abuse

here comes the wet wet song from musangking

Posted by YONG > 2020-04-14 12:50 | Report Abuse

Let's push through 1.03 and closed at 1.06 today.

Posted by VIN3133 > 2020-04-14 13:00 | Report Abuse

Haha , Bang MusangKing
Good that u come in timely to lighten up the atmosphere in the current tense MCO period !!
Cheers !!

Posted by SarifahSelinder > 2020-04-14 13:57 | Report Abuse

Cashflow problems.....

Chain reaction

For counters yg u beli better double check who is at d top of the food chain

Whn d top dog is hit default wld work its way from d top all d way to d bottom in a chain reaction

Safest top dog is gomen

Next is small but many debtors

Wobbly is d oil majors

Posted by SarifahSelinder > 2020-04-14 13:59 | Report Abuse

Investors r very in touch wit development kat Hai Duong IPP

IPP is essential service business as usual

Posted by SarifahSelinder > 2020-04-14 14:02 | Report Abuse

Hai Duong IPP top dog is Vietnam gomen

Posted by johnswj90 > 2020-04-14 14:13 | Report Abuse

Dear DK66, thanks so much for your clarification. I would like to summarize this into layman term. Please correct me if I am wrong. JHDP will position itself as an operator of the Plant as well as a "Bank" to EVN. JHDP took loan from a bank with a loan tenure of 18 years (quoted from one of your article) which it has to serve the interest (expense) and the principle (loan payable), 6% for a period of 18 years. At the same time, JHDP will receive capacity payment from EVN for 25 years which the costs will be recorded as interest (income) and principal paid (loan receivables). Given the IRR of 12% over a period of 25 years, it is like JHDP will serve as a "Bank" who charges a 12% interest to EVN and EVN will pay a certain amount as capacity payment for a tenure of 25 years. Energy payment will be a separate story related to the operation of the Plant. In short, EVN pays you the amount based on the agreed efficiency (heat rate) to cover your costs. Any savings/optimized cost (given same amount of electricity dispatched) realized shall be kept by JHDP as additional profit.

Feel free to comment if there is any mistake here.
-----------------------
johnswj90, under the new accounting standard, the construction costs will no longer be recognised as concession assets hence amortised/depreciated over the concession period. Instead, the costs is recorded as "loan receivables" and gradually reduced (by capacity payment) over the concession period.

At the end of the concession period, the power plant will be transferred to the Vietnam government free of charge.

-------------------------
johnswj90 DK66, I would like to seek your opinion on the depreciation calculation for this plant, whether will it be a straight line 25 years with no recovery cost or the company can recover a certain residual amount after 25 years based on the BOT contract.
14/04/2020 11:04 AM

Posted by DK66 > 2020-04-14 14:26 | Report Abuse

johnswj90, you understanding is correct except the 6% borrowing cost is only an estimate, and 12% IRR is not equivalent to 12% interest charge to EVN. Loan receivables represents the cost of the power plant not exactly the bank borrowings.

---------------------
johnswj90 Dear DK66, thanks so much for your clarification. I would like to summarize this into layman term. Please correct me if I am wrong. JHDP will position itself as an operator of the Plant as well as a "Bank" to EVN. JHDP took loan from a bank with a loan tenure of 18 years (quoted from one of your article) which it has to serve the interest (expense) and the principle (loan payable), 6% for a period of 18 years. At the same time, JHDP will receive capacity payment from EVN for 25 years which the costs will be recorded as interest (income) and principal paid (loan receivables). Given the IRR of 12% over a period of 25 years, it is like JHDP will serve as a "Bank" who charges a 12% interest to EVN and EVN will pay a certain amount as capacity payment for a tenure of 25 years. Energy payment will be a separate story related to the operation of the Plant. In short, EVN pays you the amount based on the agreed efficiency (heat rate) to cover your costs. Any savings/optimized cost (given same amount of electricity dispatched) realized shall be kept by JHDP as additional profit.

Feel free to comment if there is any mistake here.

Posted by 2721 > 2020-04-14 15:10 | Report Abuse

boom shakalaka..cleared several road block, is time to challenge recent new high 1.04

Posted by johnswj90 > 2020-04-14 15:40 | Report Abuse

DK66, thank you for the clarification. As of now I would take 6% as the guideline for my own calculation.

I would like to seek further advice from you in terms of the capacity payment. Based on the latest accounting standard, how do we determine the portion to be recorded as loan receivables and interest income? Sorry for taking your time to answer my queries.
--------------------
johnswj90, you understanding is correct except the 6% borrowing cost is only an estimate, and 12% IRR is not equivalent to 12% interest charge to EVN. Loan receivables represents the cost of the power plant not exactly the bank borrowings.

---------------------
johnswj90 Dear DK66, thanks so much for your clarification. I would like to summarize this into layman term. Please correct me if I am wrong. JHDP will position itself as an operator of the Plant as well as a "Bank" to EVN. JHDP took loan from a bank with a loan tenure of 18 years (quoted from one of your article) which it has to serve the interest (expense) and the principle (loan payable), 6% for a period of 18 years. At the same time, JHDP will receive capacity payment from EVN for 25 years which the costs will be recorded as interest (income) and principal paid (loan receivables). Given the IRR of 12% over a period of 25 years, it is like JHDP will serve as a "Bank" who charges a 12% interest to EVN and EVN will pay a certain amount as capacity payment for a tenure of 25 years. Energy payment will be a separate story related to the operation of the Plant. In short, EVN pays you the amount based on the agreed efficiency (heat rate) to cover your costs. Any savings/optimized cost (given same amount of electricity dispatched) realized shall be kept by JHDP as additional profit.

Posted by DK66 > 2020-04-14 15:45 | Report Abuse

johnswj90, please read this article first. If you still do not understand, i will explain further.

Jaks Resources – Peer Comparison With Mong Duong II

https://klse.i3investor.com/blogs/Jaks%20resources/2019-04-29-story204451-Jaks_Resources_Peer_Comparison_With_Mong_Duong_II.jsp

--------------------
johnswj90 DK66, thank you for the clarification. As of now I would take 6% as the guideline for my own calculation.

I would like to seek further advice from you in terms of the capacity payment. Based on the latest accounting standard, how do we determine the portion to be recorded as loan receivables and interest income? Sorry for taking your time to answer my queries.

Posted by johnswj90 > 2020-04-14 22:19 | Report Abuse

Dk66, OK will slowly digest them Thanks.

Posted by DK66 > 2020-04-14 23:15 | Report Abuse

johnswj90, you are welcome.

By the way, are you an accountant ? It is easier for an accountant to swallow the article.

---------------------
johnswj90 Dk66, OK will slowly digest them Thanks.
14/04/2020 10:19 PM

Posted by apple4ver > 2020-04-14 23:27 | Report Abuse

https://asiatimes.com/2020/03/covid-19-knocking-the-lights-out-in-vietnam/
Delayed investments will bring greater power crunch once the economy recovers from this Covid-19 pandemic. Economics 101 tells us when demand outstrips supply, the balance of power shifts to suppliers. Foresee parallel to the golden years for IPPs Malaysia post 1992 TNB blackout.

Posted by i3lurker > 2020-04-15 07:23 | Report Abuse

That's NOT how it works.
IPP is never a Rosy Business at all.

Vietnam gives out either 10% IRR or 12% IRR
for this case Jaks gets 12% IRR from PPA

The 12% IRR is the TOTAL IRR = Capacity + Plant Operations

the project cost is already 6% from loans, while 6% interest does not equal IRR, it is indicative, it does indicate a big whack to the 12% IRR.
So for 18 years the plant will be getting something like a net of 6% IRR ONLY.
That's what a very good Fixed Deposit account can give you.
There were 2 banks in Malaysia which gave you almost 6% interest on FD just last year, before covid-19

johnswj90 Dear DK66, thanks so much for your clarification. I would like to summarize this into layman term. Please correct me if I am wrong. JHDP will position itself as an operator of the Plant as well as a "Bank" to EVN. JHDP took loan from a bank with a loan tenure of 18 years (quoted from one of your article) which it has to serve the interest (expense) and the principle (loan payable), 6% for a period of 18 years. At the same time, JHDP will receive capacity payment from EVN for 25 years which the costs will be recorded as interest (income) and principal paid (loan receivables). Given the IRR of 12% over a period of 25 years, it is like JHDP will serve as a "Bank" who charges a 12% interest to EVN and EVN will pay a certain amount as capacity payment for a tenure of 25 years. Energy payment will be a separate story related to the operation of the Plant. In short, EVN pays you the amount based on the agreed efficiency (heat rate) to cover your costs. Any savings/optimized cost (given same amount of electricity dispatched) realized shall be kept by JHDP as additional profit.

Posted by i3lurker > 2020-04-15 07:34 | Report Abuse

The Capacity payment will only be paid on "Power on ready status"

that means if Utility gives order to power on, IPP has X hours to provide stable power.
Unable to power on means Capacity payment will NOT be paid.
You did not provide Capacity, so no payment at all.

if your plant does not have coal, unable to import coal from air courier 747 planes even. (covid-19)
or cracked a bearing
or boiler cracked
or turbine cracked/imbalance
then so sorry for your Capacity payment.
Sayonara.

Say Goodbye to your investment.

IPP is a very risky business.

Posted by SarifahSelinder > 2020-04-15 08:27 | Report Abuse

Can tell how is the capacity payment clause normally worded in a PPA?


3lurker The Capacity payment will only be paid on "Power on ready status" 

that means if Utility gives order to power on, IPP has X hours to provide stable power. 
Unable to power on means Capacity payment will NOT be paid. 
You did not provide Capacity, so no payment at all. 

if your plant does not have coal, unable to import coal from air courier 747 planes even. (covid-19) 
or cracked a bearing 
or boiler cracked 
or turbine cracked/imbalance 
then so sorry for your Capacity payment. 
Sayonara. 

Say Goodbye to your investment. 

IPP is a very risky business.

15/04/2020 7:34 AM

Posted by SarifahSelinder > 2020-04-15 08:29 | Report Abuse

How frequent is the capacity availability tested in a year?

Posted by SarifahSelinder > 2020-04-15 08:31 | Report Abuse

Come tell us how all ths clauses r worded cos ur punya English is not very good maybe u interpret salah ke apa

Posted by DK66 > 2020-04-15 08:40 | Report Abuse

Project IRR 12% is on net return basis. ie already netted of interest cost.

12% IRR does not equal to 12% interest rate. Those interested can google.

Capacity payment is dependent on capacity made available. It does not depend on availability of fuel. There is a coal supply agreement with Vinacomin, a state company, guaranteeing supply of coal for 25 years.

Posted by SarifahSelinder > 2020-04-15 08:43 | Report Abuse

i3lurker

U required high standard

Nothing less thn fact n figures

Tapi u always comment general je

Give details

Posted by JJchan > 2020-04-15 09:52 | Report Abuse

there are some leftover foot soldiers at 1.01, 1.02 & 1.03 that cannot leap before the previous plunge. Clear them, the path to 1.15-1.20 is clearly visible

Posted by Aseng > 2020-04-15 09:52 | Report Abuse

good morning

jaks turns green
myeg turns green
ekovest going to turn green

Posted by hng33 > 2020-04-15 10:11 | Report Abuse

sold back all jaks at 99.5-1.00, locked all profit, deleverage margin to nil, keep portfolio all in cash

Posted by Aseng > 2020-04-15 10:52 | Report Abuse

hng33

pandai

Posted by Aseng > 2020-04-15 10:54 | Report Abuse

join me at myeg now

game has just started

1.00 resistance is broken yesterday

today strong trading confirmed the uptrend

Posted by huahtai98 > 2020-04-15 11:52 | Report Abuse

Jaks is very difficult to trade now....it has become very elusive and tricky.

Posted by DK66 > 2020-04-15 11:58 | Report Abuse

For those who wish to read more on PPA tariff.

https://esmap.org/sites/default/files/esmap-files/ESMAP%20IFC%20Re%20Training%20World%20Bank%20Nehme.pdf

Posted by 2721 > 2020-04-15 12:04 | Report Abuse

klci mau challenge 1400pts today

Posted by pjseow > 2020-04-15 12:21 | Report Abuse

The formula for calculating IRR is as follows

NPV = Investment + X/(1+R) +X/(1+R)(1+R)+ X/(!+R)(1+R)(1+R)+...
0 = - 1868 + X/( 1+ 0.12)+ X/(1+0.12)(1+0.12) + ....for 25 yrs

0 = - 1868 + 0.89X+ 0.79X + 0.71X + .............+ the 25th 0.05X

where NPV is zero , capital investment is US 1868 million
IRR = 12 % based on Jaks management calculation .
X is the annual cash inflow

Summing up the total number of X for 25 years , I got

7.8 X = US 1868 million or
X = US 239 million

With Jaks owning 30 % , the annual cash flow is RM 301 million using an exchange rate of 4.2 .

Using DK 66 estimation of capacity payment of US 109 million, Jaks 30 % portion is RM 137 million . I deduced that the energy payment is estimated to be ( 301 -137 ) million or 164 million .

Welcome any comment

Posted by 2721 > 2020-04-15 12:25 | Report Abuse

https://www.enanyang.my/?p=1392049

Posted by Ed168 > 2020-04-15 13:09 | Report Abuse

Everyone talked about profits projection from Vietnam, what about covering the losses in Malaysia operation in 2020? All profits projected will be gone.

Posted by YONG > 2020-04-15 16:03 | Report Abuse

Proposing to build slag waste disposal site of BOT Thermal Power Plant
https://baohaiduong.vn/kinh-te---tieu-dung/de-nghi-xay-bai-thai-xi-nha-may-nhiet-dien-bot-133744

Posted by johnswj90 > 2020-04-15 16:21 | Report Abuse

DK66, I am not an accountant. I am an engineer by profession.

I am interpreting in such a way that for a capacity payment of USD 253 Million for a period of 25 years for a USD 1.868Billion project, that provides a 12.9% of IRR. Well if we normalize against the capacity of both plants (Hai Duong is 1200MW while Mong Duong II is 1240MW), a USD245Million capacity payment gives rise to an IRR of 12.4% which is also rather in line with Jaks management's projection. I might be wrong in such interpretation.

Regarding the capacity payment, I created an amortization table over 25 years payment based on the Project costs of USD 1.868Billion for capacity payment of USD 244 Million (Mong Duong II is 1240 MW while Hai Duong is 1200MW) so, slightly lesser capacity payment, which gives an effective interest rate of around 12.4% (well, similar to the IRR value calculated previously). This is an equivalent to we are receiving a higher interest income in the beginning than principal, and vice versa and time goes by approaching the end of 25 years. Similar to a standard home loan.

What I do not understand is that how the capacity payment of USD 253million is split among the USD 67M (loan receivables) and USD 186M (interest income). Maybe the USD67 Million is obtained by dividing the remaining number of years of operation (tenure) over Remaining Costruction costs (Total loan receivables), and the rest are interest income? Which is the reason of me raising my query here in order to understand the article better.

Anyway, I really appreciate your time to attend to my queries as a newbie here. Please feel free to correct me should there be any flaw in my interpretation.

--------------------
johnswj90, you are welcome.

By the way, are you an accountant ? It is easier for an accountant to swallow the article.

---------------------
johnswj90 Dk66, OK will slowly digest them Thanks.

Posted by hng33 > 2020-04-15 16:26 | Report Abuse

Proposing to build slag waste disposal site of BOT Thermal Power Plant
WEDNESDAY, 4/15/2020 13:07:29

The BOT Thermal Power Plant project has implemented 90% of the construction and installation volume, preparing to test unit 1 but the slag dump of the project has not been built.

The Provincial People's Committee has just proposed the Prime Minister to consider and agree on the policy of constructing slag waste dump of the Hai Duong BOT Thermal Power Plant project (Kinh Mon) invested by JAKS Hai Duong Power Company Limited.

So far, the BOT Thermal Power Plant project has implemented 90% of the construction and installation volume, preparing to test unit 1 but the slag dump of the project has not been built.

The location of the slag disposal site is located in the beach area of ​​Kinh Thay River, at the foot of Sau Mountain. The slag dam barrier is 150-400 m from the edge of the river, about 600 m from the connection point between Sau Mountain and the right bank of Kinh Thay River, about 400 m downstream. Slag reservoir is located in Sau mountain valley.

https://baohaiduong.vn/kinh-te---tieu-dung/de-nghi-xay-bai-thai-xi-nha-may-nhiet-dien-bot-133744

Posted by DK66 > 2020-04-15 17:21 | Report Abuse

johnswj90, yes, the excess over the loan receivables repayment is taken up in the P/L as interest income.

As payments are collected from the customer over the term of the contract, consideration related to the construction performance obligation is split between the repayment of loan receivables and interest income. You are right to determine the annual loan receivables repayment amount as simply the equal portion of the loan receivables over the concession period, i e straight line.

There is no specific formula to determine the proportion of capacity payment to be repayment and income. I suppose the profit element is determined by the required returns of the investors. In this case IRR of 12%.

---------------------------------
johnswj90 DK66, I am not an accountant. I am an engineer by profession.

I am interpreting in such a way that for a capacity payment of USD 253 Million for a period of 25 years for a USD 1.868Billion project, that provides a 12.9% of IRR. Well if we normalize against the capacity of both plants (Hai Duong is 1200MW while Mong Duong II is 1240MW), a USD245Million capacity payment gives rise to an IRR of 12.4% which is also rather in line with Jaks management's projection. I might be wrong in such interpretation.

Regarding the capacity payment, I created an amortization table over 25 years payment based on the Project costs of USD 1.868Billion for capacity payment of USD 244 Million (Mong Duong II is 1240 MW while Hai Duong is 1200MW) so, slightly lesser capacity payment, which gives an effective interest rate of around 12.4% (well, similar to the IRR value calculated previously). This is an equivalent to we are receiving a higher interest income in the beginning than principal, and vice versa and time goes by approaching the end of 25 years. Similar to a standard home loan.

What I do not understand is that how the capacity payment of USD 253million is split among the USD 67M (loan receivables) and USD 186M (interest income). Maybe the USD67 Million is obtained by dividing the remaining number of years of operation (tenure) over Remaining Costruction costs (Total loan receivables), and the rest are interest income? Which is the reason of me raising my query here in order to understand the article better.

Anyway, I really appreciate your time to attend to my queries as a newbie here. Please feel free to correct me should there be any flaw in my interpretation.

Posted by johnswj90 > 2020-04-15 17:27 | Report Abuse

DK66, thank you for your clarification which has cleared my queries and doubts. Really appreciate it.
-------------------
johnswj90, yes, the excess over the loan receivables repayment is taken up in the P/L as interest income.

As payments are collected from the customer over the term of the contract, consideration related to the construction performance obligation is split between the repayment of loan receivables and interest income. You are right to determine the annual loan receivables repayment amount as simply the equal portion of the loan receivables over the concession period, i e straight line.

There is no specific formula to determine the proportion of capacity payment to be repayment and income. I suppose the profit element is determined by the required returns of the investors. In this case IRR of 12%.

Posted by DK66 > 2020-04-15 17:37 | Report Abuse

You are welcome
--------------------------
johnswj90 DK66, thank you for your clarification which has cleared my queries and doubts. Really appreciate it.

Posted by 2721 > 2020-04-15 20:38 | Report Abuse

oh no..future drop 500+ pts

Posted by amet2017 > 2020-04-15 21:04 | Report Abuse

Second round of downtrend coming, 1000 - 2000 drop per day

Posted by Tyre220069 > 2020-04-15 21:23 | Report Abuse

Not to worry, one day up 500, next day down 500...will be around 23000to 24000 until next month when Lockdown lifted, then will move to 26000 or 27000