MFCB-WA can up 270% or 140% in 3 years?

MFCB Target Price RM4.43 - exercise price of RM2.20 = RM2.23

Divided by MFCB Warrant price RM0.60 = upside of 270% !!

Medium term 12 months upside is 70% +.

My conservation calculation is 140% upside for 3 years.

Workings:
MFCB have this USD500m (RM2bn) Don Sahong hydropower project which has been on track, reaching 10% completion as of Aug 2016. The deadline to complete the project is31 Dec 2019 while commercial operation is scheduled to take place in early 2020.

Public Investment Bank's analyst said expecting a more than 3-fold jump in earnings.

I also tell you the bad points, may lose 70% of Group revenue (RM51.8 X 70% = RM36.26mil) and diluting with warrants.

2015 net profit RM51.8 million.
1-fold jump in profit RM51.8 million + RM51.8mil = RM103.6 million.
3-fold jump in profit = RM51.8 X 3 + RM51.8mil = RM207.2 million 

207.2m - losing 36.26m profit = RM170.94million

Shares issued 401.9m, + warrants 67.3m = 469.2

Earnings per share RM0.364

X 10 times PE ratio = RM3.64

Warrant in the money price =  RM3.64 deduct exercise price RM2.20 = RM1.44
Warrant Price now RM0.60.
= 140% upside.

140% is a conservative figure.

For those medium term 12 months MFCB Target Price given by Public Investment Bank RM3.16.

MFCB Target Price RM3.16 - exercise price of RM2.20 = RM0.93

Divided by MFCB Warrant price RM0.60 = upside of 55% in 12 months.

12 months for sure will still trade at premium, so the upside could be 70%.

1)I use fully diluted from warrants.

2)Between now and 3 years later, MFCB may get new projects

3)The China concession expiry in 2022, another 6 years. And they may not lose it.

4)PE ratio is only 10 times. Historical is more than 10x???

5)Analyst said earning more than 3-fold. The above assumption is only 3-Fold.

Public Investment Bank analyst said . . . ..
The Laos hydropower project could fetch as much as RM4.43/share. Upon the full commercial operation of the hydropower plant, we forecast that the Don Sahong Hydropower could contribute as much as RM4.43/share (WACC: 7%) based on our DCF valuation. As of now, we apply a higher WACC of 10% coupled with a 30% discount for the risk exposure during the construction period, which yields a valuation of RM2.26/share. All-in, our SOP-based TP is revised upwards from RM2.29 to RM3.16.

Let's said we don't bother about my own analysis, purely go for MFCB target price of RM4.43 in the future, the potential upside of RM4.43 is a lot.

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