JAKS Resources’ (JAKS) 4QFY19 net profit, as expected, slowed down to RM17.8m (NM YoY, -28.7% QoQ) which was within our expectation but below consensus. In FY19, Group net profit came in at RM108.6m (>100% YoY) which constituted 96% and 90% of our and consensus full year estimates. The overall completion for its power plant in Vietnam is said to be at 93%, from 82% a quarter ago. We understand that the completion of its first unit which was initially thought to be by end-2019 is now postponed due to Covid-19. The commercial operation date (COD) is now targeted for 3QFY20, from 1HFY20 earlier. As such, we revise our FY20/FY21earnings downwards by -41%/-29%. We also change our valuation method from SOTP to RNAV as JAKS’ value is now mainly driven by its power plant, versus various business units previously. Maintain Neutral, with TP increased to RM1.13, from RM1.00 previously (pegged at 35% discount to RNAV) on lower completion risks of its power plant. All told, we are still wary over the various dilutive equity fund raisings done so far to meet its liquidity demands and the poor execution especially on its property business.
Source: PublicInvest Research - 28 Feb 2020