EcoWise 5CT

[la papillion]

Hi chaibu,

Haha, didn't know you are vested in ecowise as well I'm not vested and never truly interested in the company, though I'm interested in their business. Will be looking closely into it.

Btw, they never truly disclosed their intention to do the rights shares right? I sort of browsed through the announcement. Tried searching for it, but didn't find it inside.

[chaibu]

yo, chaibu,

now, i decided to follow the Co. for their story, partially, to test out our business knowledge in a way. if u were the operator, what would u do?

nevertheless, it was quite a good brainstorming session with him (with you as well).

howdy san2.

Not sure whether the question was for me. If it is then you flatter me. Me just a troller and just like you I follow the story trying to figure out the business cycle i.e if I understand the business enough to be able to translate that knowledge in terms of earnings.

In simple terms let's call it kaypohing.

Just like a kaypoh I am trying to figure out why you blur blur buy and blur blur sell. The first thing comes to mind is emotion given that the price took a dive to 7c and rebounded to 19c. That's when you begin to feel the itch which must be scratched. This scenario has a ring fo familarity as I too have experienced this many many times. Less often now as I make it a point to double check the story before doing my finger exercise.

Technically I see a formation of a full cup at around 19c. This is hindsight widsom looking at the 5-year chart. Then you probably see vertical lines like tv antennaes on roof tops. From 7c to 19c that's something. Makes sense to say there is no smoke without fire and checking the story would probably be a right thing to. My guess is that you sold just before the 1H results were out in late December. That was a great result.

Just giving me 2c worth of thought. take care

[chaibu]

Hi chaibu,

Haha, didn't know you are vested in ecowise as well I'm not vested and never truly interested in the company, though I'm interested in their business. Will be looking closely into it.

Btw, they never truly disclosed their intention to do the rights shares right? I sort of browsed through the announcement. Tried searching for it, but didn't find it inside.

Ha...we meet again. Never interest in the company but interested in their business? Never mind, look closely and share with us what you see. Can?

Anyway my interest is past tense now academic interest only.

Had another look at the announcement before coming here.
1) The 1c bonus dividend is to reward shareholders
2) Shareholders can choose to convert dividend to shares or keep the money.

Flushed with cash especially after selling 50% of Ecowise Solutions to JV partner Holcim for US$3.8m on top of net cash of > $7m in the books it is good to be shareholder-friendly in distributing excess cash to shareholders (including the major shareholders).

One thing bugs me though is why do it now in the middle of nowhere i.e. between the half-year and full- year reports. Dare we entertain the thought of a final dividend come December? Playing corporate games?

The other bug is why the rights issue? Ultimately with the warrants included there will be something like 600 million shares. This is too big a number for me to crunch. Can we borrow your microscope and dissect the numbers to a single EPS and hope the decimal is in the right place like in the case of Qian Hu.

Enjoy what's left of your weekend and take care.

[helios]

dear chiabu,

you are awesome, and you should share with us oftenly.

how expressive you are!

[chaibu]

Hi San2,

Thank you for your compliment in the sense that the bottom-up approach may be a welcomed change. It leaves me only to reciprocate you guys are also awesome in your helicopter views. No doubt about this.

Incidentally, if you do make that site visit be sure to dig more on the Carbon Credit thing and which was not mentioned in the latest half-year results. Another goodie hidden in the bag? Somewhere in my head is a figure of $450k annual income.

[helios]

Embedded videos have been disabled.
Click to view video: http://www.youtube.com/watch?v=7LPWl4Z13Fo&feature=related

ecoWise became the first Singapore-registered company to secure a Emission Reduction Purchase
Agreement with Kansai Electric Power Company Corp, Osaka for CERs or carbon credits on 5 November 2007. Kansai Electric Co Inc, one of Japan’s leading energy companies, committed to purchase 95,000 CERs from the Group from 2008 to 2011.

Was e carbon credit income mention? it was said to be sold at 'market value' since it's a contract ... not sure got any materialistic impact for fiscal annual report'08?

[la papillion]

Ha...we meet again. Never interest in the company but interested in their business? Never mind, look closely and share with us what you see. Can?

Anyway my interest is past tense now academic interest only.

Had another look at the announcement before coming here.
1) The 1c bonus dividend is to reward shareholders
2) Shareholders can choose to convert dividend to shares or keep the money.

Flushed with cash especially after selling 50% of Ecowise Solutions to JV partner Holcim for US$3.8m on top of net cash of > $7m in the books it is good to be shareholder-friendly in distributing excess cash to shareholders (including the major shareholders).

One thing bugs me though is why do it now in the middle of nowhere i.e. between the half-year and full- year reports. Dare we entertain the thought of a final dividend come December? Playing corporate games?

The other bug is why the rights issue? Ultimately with the warrants included there will be something like 600 million shares. This is too big a number for me to crunch. Can we borrow your microscope and dissect the numbers to a single EPS and hope the decimal is in the right place like in the case of Qian Hu.

Enjoy what's left of your weekend and take care.

Hi chaibu,

My interest is also academic only

A few points to mention:

1. I feel that ecowise is too generous in issuing their own 'printed currencies' by giving out new shares wantonly. It's sort of blackmailing shareholders by giving them dividends and at the same time issuing rights. If shareholders choose not to subscribe to rights, their holdings will be diluted. I find that disturbing, especially when there are no more clarifications as to why there are issuing new shares. I also find it weird that they choose to do it between the half year and full year reports. They could have done it in their 1H results released on 12th June, 2008.

2. Take a look at the potential dilution down the road:

1H08 net profits (including extraordinary gains) is $6,541,000.
1H08 net profits (excluding extraordinary gains) is $1,438,000 (i subtracted off $5,103,000) from their disposal of 50% of subsidiary.
Annualized full year 2008 profit without extraordinary gains = $2,876,000 (1.438k x 2 = 2.876k)

Based on my simple forecast,
Annualized full year 2008 profit (includes gains) = $7,979,000 (2.876k + 5.103k = 7.979k)

Share capital: 376,067,246
Outstanding warrants: 52,263,116
Potential rights issue: 249,975,000

Assume 100% subscription for rights, total shares excluding warrants = 626,042,246
My forecast for EPS fullyear 2008 = 1.27 cts (7.979k / 626042.246 = 1.27 cts)

For comparison
FY07 full year net profit = $4,861,000
Diluted EPS FY07 (based on 85,798,288 shares) = 5.67 cts

3. The underlying business is deteriorating, unless new engines of growth are injected. Carbon credit (nowhere is it mentioned in the results, interestingly as you pointed out) could be THAT thing ecowise is rooting for. How did you get the figure of 450k annual income?

[chaibu]

Hi La Pap,

You got the science right on the dot. I am a little uncomfortable with the inclusion of extraordinary gain in your calculation. Take that away and see what the operating eps is. I am too lazy to make any adjustment as I normally dilute all the way.

The 450k annual income is the outcome of my "artistic' inclination. It is 95,000 CERs @$20 = $1.9m from early 2008 to end 2012. Oh oh, made a mistake here. Should be 5 years instead of 4 years which is just below $400k.

Btw these guys also reward themselves with performance shares! Yes, no mistake here. Real collectors huh?

[la papillion]

Hi La Pap,

You got the science right on the dot. I am a little uncomfortable with the inclusion of extraordinary gain in your calculation. Take that away and see what the operating eps is. I am too lazy to make any adjustment as I normally dilute all the way.

The 450k annual income is the outcome of my "artistic' inclination. It is 95,000 CERs @$20 = $1.9m from early 2008 to end 2012. Oh oh, made a mistake here. Should be 5 years instead of 4 years which is just below $400k.

Btw these guys also reward themselves with performance shares! Yes, no mistake here. Real collectors huh?

Hi chaibu,

Normally I stripped away the extraordinary gains when evaluating companies. But for this case, I'm trying to have a ballpark figure of where their EPS for FY08 lies, I have to include the amt gained from divesting 50% interest in their subsidiary.

Without their extraordinary gains, EPS for FY08 is around 0.46 cts after taking into account the new rights. If not for the new rights, their EPS will be 0.76 cts. Quite low compared to FY07 EPS of 5.6 cts right? Must be the result of their excessive rights issue.

Shares outstanding goes from 85,798,288 -----then 379,067,246----- then 626,042,246. If only their revenue or profit increases at this rate, haha!

Ah ha, now I see where your 450k comes in. Hmm, if that happens, shouldn't they recognise the revenue or profits partially. It can't be that only in 2012 will we see a big jump in net profit right? There is absolutely no mention of that in their recent reports.

[chaibu]

Hi LP

Oh my, you are really up to steam with your science. I am still half way there with the outstanding shares.

So right down to the wire the EPS for FY08 is 0.0046. If we assign a PE8 the market price should be around 4 cents. Ok, let's make it PE10 which should translate to say 5 cents. To get your 15% return you have to wait for jack to come tumbling down to 1 - 1.5c. That's no good.

In all fairness you will probably agree Ecowise is a decent business with producing decent earnings. The negative aspect is no discernible growth propect as we look in from the outside at the moment. And the negative vibes when it comes to the Management.

What you need to do is to make that site visit happen.

All this talk is making me thirsty. Time for a Tiger. Where is the next watering hole. Which company?