ISDN Holdings

[weijian]

Additionally, the commercialisation of LB 1 is bringing in significant earnings to the table, circa $2.9m. Add that with 2 more commercialisation of Anggoci and Sisira which can bring an estimation of $3.5m earnings for the remaining FY 2023, I' m confident of the future prospects of this company.

the much awaited COD is finally here for the other 2 hydro plants.

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ISDN: First hydropower plant to add 18.5% to group earnings
https://www.nextinsight.net/story-archiv...p-earnings

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When ISDN first presented their hydropower update back in Jan2023, it looked really good, as a matter of fact, too good (to be true?). With FY23 results released recently, I think there is finally more "clarity" with regards to the "earnings power" of the hydropower plants.

FY23 statements wrt to the hydropower plants:
ISDN’s hydropower business (2% of revenue) reached historic milestones in FY2023 with all 3 initial plants now commercialised and delivering approximately $8m in recurring net cash income a year for the Group.

In FY2023, the Group recognised S$3.1 million operating revenue and S$3.6 million finance lease income as revenue for the three hydropower plants. A total of S$8.8 million was billed to PT PLN (Persero) (“PLN”) for FY2023 and received as of January 2024.

So what is "finance lease income"? ChatGPT definition of "finance lease income" as below:
The finance lease income consists of the total payments received by the lessor over the lease term. This income is recognized over the lease term as the lessee makes the lease payments. The lessor typically earns both interest income and a recovery of the cost of the leased asset through these payments.

So finance lease income is actually a "return of capital". This amount in the commentary matches very closely with what occurs at the cashflow statement where it de-recognized "receivables from service concession arrangements" of 3,464,000 for FY23. To recap, ISDN capitalizes all the costs of construction for the hydropower plants under "Service concession receivables" on the balance sheet.

In essence, this "8mil of recurring net cash income" consists of returns of capital + returns on capital. The true "net profit" as we all know it, is probably only between 40-60% of 8mil (if VBs with much better accounting skills than me, can help derive a more "accurate figure")

Now if we look back the previous IN article and ISDN press release, some numbers like "+18.5% based on annualised 2022 earnings" and "Cash return on equity: 27%" are probably over-rated.