Posted by Aseng > 2020-05-07 14:13 | Report Abuse

my good friends ,

many bosses of list companies, do not quite understand what is irr analysis, they only read the last figure prepared by their investment accountant. but if you present to them the peer comparative figure done by DK66, they are more happy, and most of the time their investment decisions are made based on this methodology .

believe or not ?

may be may good friend OTB can provide you a better answer .

Posted by probability > 2020-05-07 14:13 | Report Abuse

Ok fine DK66, no issues if you are not presenting the table. Its a lot of work i suppose.

However, hope i can conclude that the only argument you have that we should use FCF-E on Project IRR given by management of 12% is because, FCF-F will wipe out the Earnings significantly below Vinh Tan 1.

I have not seen you presenting any other information to substantiate that we can use FCF-E for Project IRR calculation.

Posted by probability > 2020-05-07 14:17 | Report Abuse

Nope - but i think you may want to see only what you want to see.

Although most of the time i see you are open to other contrary opinions.

Guess, its because (If true) the implications is profound.


Posted by DK66 > May 7, 2020 2:08 PM | Report Abuse

Probably, I hope you are not implying I m hiding something.

Posted by DK66 > 2020-05-07 14:24 | Report Abuse

probability, to exclude the interest cost, Vinh Tan 1 would not have achieved its latest results. Which is more convincing ?

Posted by Aseng > 2020-05-07 14:24 | Report Abuse

probabilty,

I do not think icon8888 calculation is wrong
JHDP borrowed money from the bank is real
JHDP pays interest expenses is real

why must you insist we should exclude the interest payment . that is not reasonable and fair .

our calculation must be fair mah.....

Posted by DK66 > 2020-05-07 14:27 | Report Abuse

probability, why aren't you willing to do the IRR calculation before jumping into conclusion. Readers prefer prove of words.

Posted by probability > 2020-05-07 14:28 | Report Abuse

From my calculation its possible with an IRR 15% by increasing the gap between cashoutflow and future inflow.


Posted by DK66 > May 7, 2020 2:24 PM | Report Abuse

probability, to exclude the interest cost, Vinh Tan 1 would not have achieved its latest results. Which is more convincing ?

Posted by SarifahSelinder > 2020-05-07 14:29 | Report Abuse

No tis is not true

Sbb Vinh Tan 1 oso ada debt financing


probability 

However, hope i can conclude that the only argument you have that we should use FCF-E on Project IRR given by management of 12% is because, FCF-F will wipe out the Earnings significantly below Vinh Tan 1.

Posted by DK66 > 2020-05-07 14:30 | Report Abuse

icon888's calculation is materially correct except some adjustments to loan tenure and amortization.

Posted by SarifahSelinder > 2020-05-07 14:31 | Report Abuse

Vinh Tan 1 result is after deducting interest

Vinh Tin 1 guaranteed IRR quoted by EVN is probably 12% IRR too

Posted by SarifahSelinder > 2020-05-07 14:32 | Report Abuse

Vihn Tan 1 is real result

Posted by DK66 > 2020-05-07 14:35 | Report Abuse

Sarifah, You are right. Vinh Tan 1's results is net of interest costs

Posted by DK66 > 2020-05-07 14:37 | Report Abuse

Probability, please present your table.

Posted by SarifahSelinder > 2020-05-07 14:38 | Report Abuse

Yes

Posted by SarifahSelinder > 2020-05-07 14:40 | Report Abuse

Anyway Sarifah dah decided to remain invested in JAKS Hai Duong IPP

Posted by probability > 2020-05-07 14:45 | Report Abuse

The below gives step by step sample evaluation:

Project IRR and Equity IRR: A Curious Connection

https://feasibility.pro/project-irr-and-equity-irr-a-curious-connection/


Calculation of the internal rate of return considering only the project cash flows (excluding the financing cash flows) gives us the Project IRR.

Posted by SarifahSelinder > 2020-05-07 14:45 | Report Abuse

Peer comparison wit Vinh Tan 1 is DK66 best work

Posted by Aseng > 2020-05-07 14:46 | Report Abuse

Vinh Tan1 net profit of RM652m for the year 2019 is real

the amount is after deducting interest expenses

if exclude interest expense , the net profit will be definitely higher

what is the problem ?

why we need an IRR analysis to prove otherwise

!@@###$$%$%^^%%%^^^!!!!!

Posted by SarifahSelinder > 2020-05-07 14:50 | Report Abuse

Admittedly wat u bilang kat sini ada merit n might tally wit wat Sarifah said


SarifahSelinder Must clarity 

Did EVN specify the 75:25 funding requirement bila it quoted the 12% IRR?

07/05/2020 1:47 PM

X

SarifahSelinder Did EVN ever bother itself with funding structure of an IPP?

07/05/2020 1:50 PM


probability The below gives step by step sample evaluation: 

Project IRR and Equity IRR: A Curious Connection 

https://feasibility.pro/project-irr-and-equity-irr-a-curious-connection/ 


Calculation of the internal rate of return considering only the project cash flows (excluding the financing cash flows) gives us the Project IRR.

07/05/2020 2:45 PM

Posted by SarifahSelinder > 2020-05-07 14:53 | Report Abuse

Tapi


SarifahSelinder Peer comparison wit Vinh Tan 1 is DK66 best work

07/05/2020 2:45 PM

Posted by SarifahSelinder > 2020-05-07 14:53 | Report Abuse

The best is u show ur calculations using ur understanding of the 12% IRR

Posted by probability > 2020-05-07 14:55 | Report Abuse

@aseng, the problem is Vinh Tan 1 achieved that with a Project IRR of about ~16% (under exceptional dry season and 95.8% load) and JAKS management is only promising 12% (since they have subcritical plant unlike supercritical Vinh Tan 1 considering practical utilization rate)

Understand how one derives Earnings based on FCFF worked back from given project IRR.

I would lean on Vinh Tan 1 earning figures if JAKS say they can obtain 16% Project IRR.

Posted by Aseng > 2020-05-07 14:59 | Report Abuse

Agree.

if you talk to KYY about IRR analysis , then he will tell you, cut it short , just tell me the future earning growth is good or no good , don't make it too difficult for me .







SarifahSelinder Tapi


SarifahSelinder Peer comparison wit Vinh Tan 1 is DK66 best work

07/05/2020 2:45 PM

Posted by DK66 > 2020-05-07 15:02 | Report Abuse

probability, you surely have done the table if you know Vinh Tan 1's IRR is 16%. Can we take a look? It will be more convincing.

Posted by Antifakeguru > 2020-05-07 15:03 | Report Abuse

KYY know something than DK66 that KYY keep quiet because he know more Andy than OTB as OTB tak dapat meet Andy that day. So fishy isnt it? IB also no TP report yet.

Posted by Aseng > 2020-05-07 15:03 | Report Abuse

Aseng sincere and honest advice,

just stick to DK66 peer comparative valuation

that is most reliable


sifu Aseng : if you already have the best , but you are still asking for a better , you are killing a good opportunity to make big money

Posted by probability > 2020-05-07 15:10 | Report Abuse

DK66, i am not posting because, i have to spend sometime to touch up the column headings and its not nice to post in a blog purely to dispute something in a negative manner. You naturally dont have the energy to do something that has no gain to self...

But we can easily have an idea by looking at Icon's IRR article.

I am commenting here on my opinions freely....so that if you can convince me otherwise, its a great opportunity to invest in JAKS.


Posted by DK66 > May 7, 2020 3:02 PM | Report Abuse

probability, you surely have done the table if you know Vinh Tan 1's IRR is 16%. Can we take a look? It will be more convincing.

Posted by DK66 > 2020-05-07 15:11 | Report Abuse

probability, you can post it as an article.

Posted by probability > 2020-05-07 15:16 | Report Abuse

let me ask a straight forward question:

do you not think that the Project IRR of 12% should be derived using FCFF excluding the interest (Debt structure)?

Posted by probability > 2020-05-07 15:19 | Report Abuse

all the financial information shows that Project IRR should use FCF-F

perhaps you have some other underlying reason to include Interest due to special nature of PPA condition

seriously i dont know what is the reason you are not explaining that

I am fairly confident on the Project IRR and FCFF link but not on the PPA condition like you are aware

Posted by Aseng > 2020-05-07 15:19 | Report Abuse

my good friend
i sincere hope we can make some money here together
do not be that theoretical
why emphasize so much on IRR analysis which can be easily go wrong anytime because of too much assumptions .
why not come to real life analysis DK66 had presented to us
the peer comparative valuation


By the way , who told you JHDP is subcritical ? we are very curious to know . where is your source?



probability>> @aseng, the problem is Vinh Tan 1 achieved that with a Project IRR of about ~16% (under exceptional dry season and 95.8% load) and JAKS management is only promising 12% (since they have subcritical plant unlike supercritical Vinh Tan 1 considering practical utilization rate)

Understand how one derives Earnings based on FCFF worked back from given project IRR.

I would lean on Vinh Tan 1 earning figures if JAKS say they can obtain 16% Project IRR

Posted by probability > 2020-05-07 15:26 | Report Abuse

@aseng:


https://www.zawya.com/mena/en/project/250319031117/2-x-600-mw-hai-duong-coal-fired-thermal-power-plant-project/

The project covered the construction of a 1,200MW power plant, a powerhouse, 2 600 MW subcritical generating units, sub-stations, 4 CFB boilers, laying of transmission lines, installation of turbines and installation of generators. The project adopted the form of EPC+ Build-Operate-Transfer mode.

Posted by DK66 > 2020-05-07 15:27 | Report Abuse

Good news ! I3 admin has solved my problem. I m back !

Posted by Aseng > 2020-05-07 15:29 | Report Abuse

how about Vinh TAN 1?

can it be subcritical also ?

Posted by Aseng > 2020-05-07 15:31 | Report Abuse

don't tell me the management told you .
the management also told OTB JHDP has better design than VINH TAN 1.

Posted by probability > 2020-05-07 15:34 | Report Abuse

@aseng:

http://www.china.org.cn/business/2017-07/19/content_41245688.htm

The coal-fired power plant includes two 600-MW super-critical generating units, which are expected to be put into operation in December 2018 and June 2019, said Chen Lianqing, general manager of the Vinh Tan 1 Power Company Ltd., a consortium of China Southern Power Grid, China Power International Development and Vinacomin-Power Holding Corporation, a subsidiary under Vietnam National Coal-Mineral Industries Corporation.

Posted by Aseng > 2020-05-07 15:35 | Report Abuse

we settle this thing first
before I explain to you why the differential on the net profit CAN NOT be 18%

Posted by DK66 > 2020-05-07 15:35 | Report Abuse

Probability, there are many versions and revisions of the IRR methodogy. The application of the subject itself is widely debated.

-----------------
Posted by DK66 > May 1, 2020 3:36 PM | Report Abuse

Page 21 (summary 9)
https://www.meti.go.jp/meti_lib/report/H29FY/000594.pdf

You notice that the Presumptions used in calculation the IRR include allowance for borrowing costs.
01/05/2020 3:47 PM

Posted by DK66 > 2020-05-07 15:36 | Report Abuse

Isn't reality more important than text book ?

Posted by Aseng > 2020-05-07 15:37 | Report Abuse

probability

very good!

go and read all the comments made by Aseng , Hng33 , DK66 and OTB this morning

then come back to discuss with me .

ok ?

Posted by DK66 > 2020-05-07 15:39 | Report Abuse

Since you have done the table, it is best we speak base on your table rather than speaking blindly ? Can you take the trouble of presenting your table in an article. The alignment will be preserved in the article by taking an image of your table. No trouble

Posted by probability > 2020-05-07 15:43 | Report Abuse

DK66, the page 21 on pdf is only stating that for EIRR (Equity IRR) they will use the interest. I do not see any contradiction on that with what we had been discussing on Project IRR (PIRR).

If you see on the same pdf, they are excluding the interest effects to see the Project IRR (PIRR) to compare with WACC

Posted by probability > 2020-05-07 15:45 | Report Abuse

you mean posting it here? I dont know how that can be done..

If i have find sometime , i will do that

Posted by DK66 > May 7, 2020 3:39 PM | Report Abuse

Since you have done the table, it is best we speak base on your table rather than speaking blindly ? Can you take the trouble of presenting your table in an article. The alignment will be preserved in the article by taking an image of your table. No trouble

Posted by DK66 > 2020-05-07 15:46 | Report Abuse

The fact is they are including the interest cost for calculation to establish the desired IRR to compare against the hurdle rate of 10%.

Again, I think we should discuss further when you complete your article.

Posted by probability > 2020-05-07 15:47 | Report Abuse

appreciate a straightforward answer: yes/no on this

you are above statement saying that there are many versions on this and its debatable seem really vague for such a well established financial definition


Posted by probability > May 7, 2020 3:16 PM | Report Abuse X

let me ask a straight forward question:

do you not think that the Project IRR of 12% should be derived using FCFF excluding the interest (Debt structure)?

Posted by probability > 2020-05-07 15:50 | Report Abuse

yes they compare EIRR with Equity return rate expected - the equity hurdle rate (cost of equity)

they will compare PIRR with WACC - the complete project hurdle rate

i cant see your explanation


Posted by DK66 > May 7, 2020 3:46 PM | Report Abuse

The fact is they are including the interest cost for calculation to establish the desired IRR to compare against the hurdle rate of 10%.

Again, I think we should discuss further when you complete your article.

Posted by DK66 > 2020-05-07 15:51 | Report Abuse

Probability, My absolute answer is the interest cost must be included in the calculation of project IRR. Otherwise, Vinh Tan 1 would not have achieved its 2019 results of RM652m. That is affirmative.

By the way, are we expecting an IRR table from you ? I don't want the readers here to wait for nothing.

Posted by probability > 2020-05-07 15:53 | Report Abuse

Fine DK66, i think this the limit of answer on my query

I dont promise anything now on the table (most likely wont post)

like i said it has no gain to me


Posted by DK66 > May 7, 2020 3:51 PM | Report Abuse

Probability, My absolute answer is the interest cost must be included in the calculation of project IRR. Otherwise, Vinh Tan 1 would not have achieved its 2019 results of RM652m. That is affirmative.

By the way, are we expecting an IRR table from you ? I don't want the readers here to wait for nothing.

Posted by DK66 > 2020-05-07 15:56 | Report Abuse

Probability, one thing i m very sure here. No offend to the readers. I don't think many would really understand what we are debating about here but I know clearly where you are leading me to. If you wish to convince the reader here, better to speak with your IRR table.

Posted by probability > 2020-05-07 15:56 | Report Abuse

i have nothing to convince the readers other than myself