Recent coal price fluctuations won't hit Vietnam power plant profits, says JAKS (4723): JAKS RESOURCES BHD CEO
KUALA LUMPUR (Oct 11): JAKS Resources Bhd has given investors assurance that the recent fluctuations in coal prices will not impact the group’s profit generated from one of its power plants in Vietnam.
This is because coal prices for JAKS Hai Duong Power Plant in Vietnam are passed through to the off-taker, Vietnam Electricity, said JAKS chief executive officer Andy Ang Lam Poah in a statement on Monday.
“The coal supplied to the power plant is entirely sourced locally, via the coal supply arrangement signed with Vietnam National Coal-Mineral Industries Group, commonly known as Vinacomin, to ensure a stable supply of coal for 25 years. In light of this, JAKS is not exposed to the risk on the global coal price fluctuations,” he said.
Last month, JAKS posted a 13-fold increase in net profit to RM28.81 million for the second quarter ended June 30, 2021 (2QFY21), from RM2.17 million a year ago, powered by its RM37.5 million share of profit from its 30%-owned power plant joint venture in Vietnam.
Revenue fell 44.55% to RM41.59 million, from RM75 million in the same quarter last year, due to the lower revenue recognised from the construction division.
The group’s first ever entry into the power-energy sector was through the construction of the 1,200-megawatt Hai Duong Power Plant, which has fully commenced commercial operations in January this year.
On Sept 13, 2021, JAKS inked a memorandum of understanding (MoU) with T&T Group Joint Stock Co to explore the possibility of collaborating to develop the 1,500MW Quang Ninh 2 liquefied natural gas (LNG)-to-power project in Quang Ninh province, Vietnam.
Under the terms, both JAKS and T&T Group will agree on a common approach in relation to the implementation of the LNG-to-power project, including the location, design, technology and infrastructure involved for the import terminal and the power plant, and the selection of LNG and gas-fired power solutions suppliers.
Meanwhile, Ang said the recent 12th Malaysia Plan (12MP) has presented ample opportunities for JAKS to penetrate into Sabah market.
He said this follows the memorandum of understanding (MOU) executed on July 8, 2021 between JAKS Solar Power Sdn Bhd (JAKS Solar), a wholly-owned subsidiary of JAKS and Qhazanah Sabah Sdn Bhd (formerly known as Warisan Harta Sabah Sdn Bhd) (QSSB).
To recap, the MOU was in relation to the collaboration between JAKS Solar and QSSB to explore potential opportunities to develop solar power and hydropower plants in Sabah. As of to-date, the discussion in relation to the MOU is still ongoing.
Andy added that the strategic plans under the 12MP demonstrate potential business opportunities for JAKS to expand its footprint in East Malaysia.
“Hence, the group remains optimistic on its future outlook. Given the above, JAKS has a great prospect in replenishing the group’s construction order book, particularly in building water treatment plants and sewage treatment, in addition to constructing highways,” he said.
At 4.34pm, JAKS’s share price was one and a half sen or 3.49% higher at 44.5 sen, giving the company a market capitalisation of RM919.04 million, with 15.06 million shares changing hands.
http://www.theedgemarkets.com/article/recent-coal-price-fluctuations-wont-hit-vietnam-power-plant-profits-says-jaks-resources-ceo
