KUALA LUMPUR (July 7): Jaks Resources Bhd fell as much as 6% as investors took profit from the stock's recent rise, ahead of the crucial announcement on the builder's S$1.87 billion (RM7.12 billion) Vietnam power plant project.
Yesterday (July 6), Jaks (fundamental: 0.65; valuation: 1.50) said it roped in China Power Engineering Consulting Group Co Ltd to jointly build and run the 1,200MW power plant under a 25-year concession. Jaks said the company and China Power would each own a 50% stake in the project.
Today, Jaks shares fell as much as five sen to 78.5 sen, before reducing losses. At 12:30pm, the stock settled at 81 sen with some 20 million shares traded, making it the eighth most-active entity across the bourse.
Jaks' share trade resumed today, following a suspension yesterday.
Prior to the suspension, investors had bought the stock in anticipation of the corporate development. Last week, Jaks shares rose from 72.5 sen on Monday (June 29) to 85.5 sen on Thursday (July 2), before settling at 83.5 sen on Friday.
At a press conference yesterday, Jaks chairman Tan Sri Hussin Ismail said the power plant would be a game changer for the company, in terms of earnings growth and income stream.
“Once this project gets under way, Jaks will be able to recognise additional revenue stream from our proposed participation in the engineering, procurement and construction contracts, to be awarded by the JV company,” Hussin said.
According to Jaks chief executive officer Andy Ang, the annual recurring income from the project was estimated at US$150 million.
Ang declined to elaborate on the income to be generated from the project, but said it will provide better returns than build-operate-transfer projects in Malaysia.
(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.)