There are few points to consider before you decide whether to buy or sell JAKS.
1. Vietnam IPP contract awarded by the vietnamese government which is worth RM 7.8 billion.
2. The above powerplant is to be executed and managed by one of the largest and highly experienced Chinese construction company (CPECC) who has built and operate numerous powerplants in china and overseas.
3. According to the management from JAKS, JAKS will receive 100 million net profit every year from the operation of this mega powerplant for 25 years.
4. The powerplant is expected to complete and be operational in June 2020 (less than 1.5 years)
5. JAKS will continue to recognize profit now from the progress of the powerplant (about 300 million for 3 years until completion)
6. The losses in the last quarter result was mainly due to the exceptional payment of Rm 50 million to STAR, without this payment, JAKS would have made a decent operating profit for the quarter.
7. Jaks' poor performance from the property market is nothing infront of this tremendous profit of RM 100 million per year from the powerplant (IPP), and its for 25 years!
8. Jaks company has a high Net Assets Value of RM 1.3.
In Summary:
Powerplant business is a low risk business and the industry is usually given a PE of 12-15. With its high Net Assets Value, we give JAKS a conservative PE of 12 which converts to:
RM 100 million multiply by 12 = RM 1200 million or RM 2.05 / share
The recent rise in share price is just the beginning recovery from the plunge in share price which was mainly caused by the huge forced selling from RM 1.8 to RM 0.4 (While the company fundamentals remain intact)
Thanks for Reading ~~
Disclaimer: This is only for reference purpose and NOT a buy or sell recommendation. Data may not be 100% accurate, kindly visit official websites for more accurate details.
https://klse.i3investor.com/blogs/theintelligentinvestor/197596.jsp
