Friday 29 Mar 2024
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KUALA LUMPUR (July 6): Jaks Resources Bhd has roped in China Power Engineering Consulting Group Co Ltd to jointly build and run a US$1.87 billion (RM7.05 billion) 1,200MW power plant in Vietnam. The project comes under a 25-year concession.

In a statement to Bursa Malaysia today, Jaks (fundamental: 0.65; valuation: 1.5) said the company and China Power would each own a 50% stake in Jaks Pacific Power Ltd, which would in turn, own 100% in Jaks Hai Duong Power Co Ltd.

Jaks Hai Duong has secured a build-operate-transfer contract from the Vietnam government to undertake the project. According to Jaks, construction of the power plant is expected to start in the first half of 2016, while electricity generation is scheduled to begin in 2020.

Today, Jaks and China Power signed a subscription agreement, under which Jaks will reduce its stake in Jaks Pacific to 50%, from 100% earlier.

This will enable China Power to become an equity partner in the power plant project.

Jaks officials told reporters after the signing ceremony, that recurring income from the project would be more than US$150 million a year.

Jaks' chief executive officer Andy Ang Lam Poh declined to elaborate.
 
Chairman Tan Sri Hussin Ismail said the power plant would enable the company to diversify its income sources.
 
Jaks is already an established builder of water-related structures, besides being a manufacturer of water pipes.
 
"This is a game-changer for Jaks and fulfills our diversification strategy. Once this project gets underway, JAKS will be able to recognise additional revenue stream from our proposed participation in the engineering, procurement and construction (EPC) contracts, to be awarded by the JV company.

"Upon completion of construction and upon commencement of commercial operations, the group will then enjoy recurrent concession-type earnings from the generation and sale of power under the power purchase agreement," Hussin said.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

 

 

 

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