REMEMBER JAKS Resources Bhd which has disappeared into oblivion following a fierce “love-hate” saga between the much revered investor extraordinaire-cum-philanthropist Koon Yew Yin a.k.a Uncle Koon and the company?
Not many bullish reviews have surfaced about the water pipe manufacturer-turn-power plant operator ever since cracks began to show in the duo’s relationship after 1Q 2018.
In one of his last blogs on the company which is aptly entitled “JAKS’ future is hopeless” (dated Feb 9, 2020), Uncle Koon in an unforgiving tone wrote:
“I read Mr Ooi Teik Bee’s buy recommendation on JAKS. With due respect to him, I am writing this article with honest intention. I have no reason to break Mr Ooi’s rice bowl. Nevertheless, I hate to see investors being misled and lose money eventually.
“I am ashamed to admit that I have lost a huge amount of money because I bought JAKS in anticipation of its profit from its power plant project in Vietnam. I hate to see investors make the same mistake as I made before.”
Uncle concluded his blog with this argument:
“Currently JAKS is reporting its profit from its sale of 70% of power plant contract to a Chinese party which may looks very attractive.
“Unless its projected profit from its 30% interest of the power plant project when completed can cover the losses from its property development business, it is not safe to buy JAKS because its profit growth prospect is very bleak.”
Fast forward to present time, Malacca Securities Research has maintained its “buy” rating on JAKS with an unchanged target price of 72 sen in its latest company update.
The review follows the inking of a memorandum of understanding (MoU) between JAKS’ wholly-owned subsidiary JAKS Solar Power Sdn Bhd with Qhazanah Sabah Sdn Bhd to develop solar power and hydro power plants in Sabah.
“We deem the move to be positive for JAKS which is in line with the group’s intention to expand their presence in the renewable energy sector,” justified analyst Kenneth Leong.
“Already, JAKS has made its footprint into the renewable energy sector through the 1,200MW coal-fired thermal power plant in Vietnam which saw full commercial operation in January 2021.
“Meanwhile, JAKS Solar Power was also shortlisted for the Large Scale Solar project (LSS4) with a capacity of 50MW (megawatt).”
Accordingly, Malacca Securities Research noted that Sabah Electricity Sdn Bhd has since identified several hydropower sites in Sabah with potential of 200MW to be developed over the next decade.
“Hence, we believe that Qhazanah Sabah may be able to leverage on JAKS expertise in the renewable energy sector to explore into potential business cooperation or collaboration opportunities to drive Sabah’s economic growth,” projected the research house.
Surely, there is no denial that in the investing world, the proverb one man’s meat is another man’s poison holds true even though parties with opposing viewpoints.
At 9.45am, JAKS was up 0.5 sen or 1.08% to 47 sen with 1.99 million shares traded, thus valuing the company at RM960 mil. – July 9, 2021
