Investing

JAKS’ Profit Growth Prospect

 

Jaks’ 1,200 MW power plant can generate 1,200 X 1,000 kilowatt of electricity per hour at 0.073 USD/ kwh = USD 87,600 per hour.

I MW can light up 1,000 homes

1,200 MW can light up 1,200,000 homes

Assuming there are 5 person in each home, JAKS’ 1,200 MW power plant can serve 6 million people.

Total sale is USD 87,600 X 24hours X 360 days X safety factor of 70% = USD 530 million per year.

Jaks secured this Independent Power Producer (IPP) contract from the Vietnamese Government which involved the construction of 2 X 600 MW coal fired power plant for sale of electricity to the Vietnamese Government for 25 years. Jaks sub-contracted the whole project to China Power Engineering Consulting Group Co Ltd (CPECG) for Rm 7.76 billion. CPECG has been involved in 90% of the power generation in China.

The consortium of Chinese Government control banks has examined the power purchase agreement to ensure that it is a water tight contract for 25 years.

To ensure the successful completion, the Chinese partner does everything and Jaks does not need to do anything.

Jaks will be paid Rm 400 million during the construction period and 40% of the profit from the sale of electricity for 25 years.

All smart investors must be able to see that Jaks has a fantastic profit growth prospect which is the most powerful catalyst for moving share price. Moreover, Jaks does not need to borrow money from Banks to finance the construction of the power plant.

The chart shows that the price has been dropping in the last few months while Jaks’ business has not changed basically. In fact, the construction of the power plant has definitely made some progress. As reported, I am buying it in the last few days and I will continue to buy.

WAH! Believe it or not!

Jaks does not need capital to undertake the Rm 7.76 billion contract with a profit guarantee from Chinese Government control Banks.

As a co founder of IJM, in my 50 years’ experience in undertaking construction contracts, I have never seen any contract with a Banker’s profit guarantee.  

 

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