We are ceasing research coverage of JAKS Resources Berhad (JAKS) to reallocate our research resources. While its power plant in Vietnam is targeted to achieve commercial operation date by end-2020, we remain cautious as its local businesses are still not generating enough cash to support its business. To recap, it has just proposed another cash call via a renounceable rights issue of new ordinary shares together with free detachable warrants to raise proceeds of up to RM160.92m back in May. Our last recommendation for the stock was Underperform with a TP of RM0.77 based on c.60% discount to RNAV.

• 1QFY20 revenue dropped 75%. Group revenue was lower by 75% in 1QFY20 mainly due to lower revenue recognised from Vietnam EPC construction works of RM36.2m (vs RM255.8m in Q1FY19), a decrease of 86% YoY, due to Covid-19 lockdown which resulted in slowdown of construction works. As such, it registered 1QFY20 net loss of RM6.2m. It is still hopeful of achieving commercial operation date by 3QCY20 for the first unit and the other unit by 1QCY2021. As at May 2020, the power plant is at 93% project completion. Outstanding orderbook is c.RM489m, with c.RM211m from EPC contract in Vietnam. As for property business, Pacific Star is expected to be completed by 3QFY20 while Evolve Concept Mall’s committed tenants are still steady at 81%.

Source: PublicInvest Research - 1 Jul 2020