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Wednesday, August 31, 2016

Mudajaya - Brief Discussion on Q2 2016 Result - YiStock

Mudajaya - Brief Discussion on Q2 2016 Result - YiStock
Author: YiStock | Publish date: Tue, 30 Aug 2016, 11:09 PM

Actually i have mixed view on the latest result:

Based on latest Balance Sheet,

1) both short term and long term loan continue to reduced. From 600 million (Q3 2015) to 484 million (Q2 2016)
-> Repayment of loan 116 mil or 19.3% - GOOD

2) cash and cash equivalent:

Q3 2015 was 106.3 mil
Q4 2015 was 70.2 mil
Q1 2016 was 66.3 mil
Q2 2016 is 33.1 mil

Can see for cash portion, for the past 4 quarters, cash reduced by 73.2 mil. Where the money go? Noticed that Mudajaya has used total of 75.9 mil to repay bank loan (+ interest) from Q1 2016 & Q2 2016. At the same time also generated 43.5 mil positive cash flow from operation to fund the debt reduction - GOOD

3) The overall balance sheet has included the 26% india power asset part under under "Investment in Associate - approximately 98% of the total reported value".

From Q1 2016 to Q2 2016, the amount has reduced from 676 mil to 619 mil. A reduce of 57 million. The management explained it as depreciation charges. Please note that THIS IS NON-CASH ITEM as money already has been invested to build the UNIT 1 & 2 and become PPE and machine now has depreciated in value. Such a one-off big amount should be the accumulated depreciation since 2007 and UP TO 30 Jun 2016.

And i expect such depreciation will be normalized to it standard depreciation rate after this.

Thanks my friend who has reminded me on this NON-CASH LOSS. It is accounting practice to record such loss.

4) From also the India power plant, because they have achieved COD of UNIT 1 & 2, interest of the borrowing also cannot be capitalized after COD, i assume the amount of interest is 4 mil (61.3 mil - 57 mil)

5) What puzzle me is the "IMPAIRMENT LOSSES'- impairment of the Philippines wind farm related investmentamounted to 22.6 million. NO explanation offered on this.

But i would like to highlight, "Impairment losses on investment" VS "Impairment losses Receiveable" carry different meaning. For the wind farm case, It look more like a NON-CASH ITEM too.


From above item 3, 4 & 5, a total of RM 83.6 NON-CASH ITEM LOSS has been registered. Dont be alarmed when you see -75.9 mil red colour .

After all, those are LIKELY one-off NON-CASH LOSSES and did not affect overall MUDAJAYA's EBITDA.

As long as the company can continue to generate enough cash to continue reduced both short and long term loan, the company is still hopeful.

Oct 2016 the power plant will start selling electricity.

Let wait for the contribution from UNIT 1 & UNIT 2

On other note, please also expect similar depreciation charges for Unit 3 and Unit 4.


Please note: Mudajaya is very complicated to study. I'm not very sure about my interpretation too. It is merely sharing my view and my view is meant for my own investment decision only.

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