Malacca Securities rates Jaks Resources as a “Buy”

Malacca Securities rates Jaks Resources as a “Buy”

Jaks Resources Bhd remains a “Buy” recommendation at Malacca Securities Sdn Bhd, with higher target prices of RM0.75.

Given the somewhat better-than-expected performance, it raised its earnings prediction for FY21f and FY22f by 15.1 percent and 4.3 percent, respectively, to RM102.4 million and RM110.5 million, adjusted for the increased contribution from Vietnam operations and lower effective tax rate.

“We ascribed a target PER of 9.0x to both its construction and property development businesses, based on their expected earnings contribution in FY22f, and we generated our target price using the sum-of-parts (SOP) approach,” it added.

“Meanwhile, we used a discounted cash flow approach to assess both of its concession companies (thermal power plant and LSS4), it claimed.”

Malacca Securities’ risks to its recommendation and target price include a lower-than-expected utilisation rate or an unexpected increase in overhead costs in the Vietnam IPP project, according to the company.

It said that failure to meet our construction order book replenishment of about RM100 million per annum and the Vietnam operations are denominated in USD/MYR movement will be favourable and vice versa.

According to Malacca Securities, Jaks Resources’ 2QFY21 net profit increased by 1230.5 percent YoY to RM28.8 million, boosted by a contribution from the Vietnam power plant, which has been operational since end-2020. However, revenue for the quarter plummeted 44.5 percent year on year to RM41.6 million.

The cumulative net profit for 6MFY21 was RM48.6 million, compared to a net loss of RM4.1 million in the previous equivalent quarter. Revenue for the period, however, slipped 60.7% YoY to RM59.0m. 

The reported earnings came slightly above expectations, making up to 54.6% of our forecasted net profit of RM89.0m and 45.4% of consensus forecasted net profit at RM107.0m.

The reported earnings were slightly higher than expected, accounting for 54.6 percent of our anticipated net profit of RM89.0 million and 45.4 percent of consensus net profit of RM107.0 million.

On a more positive note, it stated that “we believe the coal-fired thermal power plant will continue to anchor the bottom line in 2H21.” 

“Despite the fact that Vietnam has been under an extended lockdown since July 2021, we expect the utilisation rate to remain stable (at or around 70%), owing to strong demand.”

Malacca Securities believes that JAKS would continue to expand its renewable energy sector, both locally and internationally, in the future. “We believe that, given the current scenario, JAKS management would consider raising an additional 10.0 percent interest in the power plant after operational cash flow from the aforementioned venture provides significant results,” it stated.

“Buy.”

Jaks Resources Bhd remains a “Buy” recommendation at Malacca Securities Sdn Bhd, with higher target prices of RM0.75.

Given the somewhat better-than-expected performance, it raised its earnings prediction for FY21f and FY22f by 15.1 percent and 4.3 percent, respectively, to RM102.4 million and RM110.5 million, adjusted for the increased contribution from Vietnam operations and lower effective tax rate.

“We ascribed a target PER of 9.0x to both its construction and property development businesses, based on their expected earnings contribution in FY22f, and we generated our target price using the sum-of-parts (SOP) approach,” it added.

“Meanwhile, we used a discounted cash flow approach to assess both of its concession companies (thermal power plant and LSS4), it claimed.”

Malacca Securities’ risks to its recommendation and target price include a lower-than-expected utilisation rate or an unexpected increase in overhead costs in the Vietnam IPP project, according to the company.

It said that failure to meet our construction order book replenishment of about RM100 million per annum and the Vietnam operations are denominated in USD/MYR movement will be favourable and vice versa.

According to Malacca Securities, Jaks Resources’ 2QFY21 net profit increased by 1230.5 percent YoY to RM28.8 million, boosted by a contribution from the Vietnam power plant, which has been operational since end-2020. However, revenue for the quarter plummeted 44.5 percent year on year to RM41.6 million.

The cumulative net profit for 6MFY21 was RM48.6 million, compared to a net loss of RM4.1 million in the previous equivalent quarter. Revenue for the period, however, slipped 60.7% YoY to RM59.0m. 

The reported earnings came slightly above expectations, making up to 54.6% of our forecasted net profit of RM89.0m and 45.4% of consensus forecasted net profit at RM107.0m.

The reported earnings were slightly higher than expected, accounting for 54.6 percent of our anticipated net profit of RM89.0 million and 45.4 percent of consensus net profit of RM107.0 million.

On a more positive note, it stated that “we believe the coal-fired thermal power plant will continue to anchor the bottom line in 2H21.” 

“Despite the fact that Vietnam has been under an extended lockdown since July 2021, we expect the utilisation rate to remain stable (at or around 70%), owing to strong demand.”

Malacca Securities believes that JAKS would continue to expand its renewable energy sector, both locally and internationally, in the future. “We believe that, given the current scenario, JAKS management would consider raising an additional 10.0 percent interest in the power plant after operational cash flow from the aforementioned venture provides significant results,” it stated.

Jaks Resources Bhd remains a “Buy” recommendation at Malacca Securities Sdn Bhd, with higher target prices of RM0.75.

Given the somewhat better-than-expected performance, it raised its earnings prediction for FY21f and FY22f by 15.1 percent and 4.3 percent, respectively, to RM102.4 million and RM110.5 million, adjusted for the increased contribution from Vietnam operations and lower effective tax rate.

“We ascribed a target PER of 9.0x to both its construction and property development businesses, based on their expected earnings contribution in FY22f, and we generated our target price using the sum-of-parts (SOP) approach,” it added.

“Meanwhile, we used a discounted cash flow approach to assess both of its concession companies (thermal power plant and LSS4), it claimed.”

Malacca Securities’ risks to its recommendation and target price include a lower-than-expected utilisation rate or an unexpected increase in overhead costs in the Vietnam IPP project, according to the company.

It said that failure to meet our construction order book replenishment of about RM100 million per annum and the Vietnam operations are denominated in USD/MYR movement will be favourable and vice versa.

According to Malacca Securities, Jaks Resources’ 2QFY21 net profit increased by 1230.5 percent YoY to RM28.8 million, boosted by a contribution from the Vietnam power plant, which has been operational since end-2020. However, revenue for the quarter plummeted 44.5 percent year on year to RM41.6 million.

The cumulative net profit for 6MFY21 was RM48.6 million, compared to a net loss of RM4.1 million in the previous equivalent quarter. Revenue for the period, however, slipped 60.7% YoY to RM59.0m. 

The reported earnings came slightly above expectations, making up to 54.6% of our forecasted net profit of RM89.0m and 45.4% of consensus forecasted net profit at RM107.0m.

The reported earnings were slightly higher than expected, accounting for 54.6 percent of our anticipated net profit of RM89.0 million and 45.4 percent of consensus net profit of RM107.0 million.

On a more positive note, it stated that “we believe the coal-fired thermal power plant will continue to anchor the bottom line in 2H21.” 

“Despite the fact that Vietnam has been under an extended lockdown since July 2021, we expect the utilisation rate to remain stable (at or around 70%), owing to strong demand.”

Malacca Securities believes that JAKS would continue to expand its renewable energy sector, both locally and internationally, in the future. “We believe that, given the current scenario, JAKS management would consider raising an additional 10.0 percent interest in the power plant after operational cash flow from the aforementioned venture provides significant results,” it stated.

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