EcoWise 5CT

EcoWise 5CT

Postby helios » Tue May 13, 2008 12:49 am

i've haven't been monitor'g EcoWise lately (today, read thro some ++ updates):

1. w.e.f 9-may, this counter is transfered from SGX CATALIST => SGX MAINBOARD;

2. 26-mar: 15 visitors under the Commonwealth Youth and Climate Change Workshop programme organized by the Singapore Environment Institute and National Youth Council visited ecoWise Biomass Cogeneration plant to have first hand exposure to a plant using sustainable energy... (possibly to tap on NYC funding?)

3. 22-apr: 4 professors/coordinators and 21 MBA students from Essec MBA programme (ranked by Financial Times as 7th worldwide, 1st in France) visited e plants to study alternative entrepreneurship and e development of a successful business with strong Corporate Social Responsibility.

4. e trend intact/ weekly chart.
Last edited by helios on Sun Jul 13, 2008 10:39 am, edited 1 time in total.
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Re: EcoWise

Postby helios » Wed May 28, 2008 3:32 pm

5. 27-May News: Investment by Envirox:

The Board of Directors of ecoWise Holdings Limited (the “Company”) wishes to announce that its wholly-owned subsidiary, ecoWise Solutions Pte. Ltd. (“ecoWise Solutions”) had acquired 98 ordinary shares, fully paid in the capital of Envirox Pte. Ltd. (“Envirox”), representing 98% of the equity interest in Envirox.

The purchase consideration for the above acquisition is SGD 14,998 and was arrived at on a willing buyer, willing seller basis.

The principle activity of Envirox is in the research and development and engineering in the water and wastewater sector.

Following the completion of the above acquisition, Envirox increased its share capital to SGD100,000 and ecoWise Solutions has further subscribed for 84,902 ordinary shares in the capital of Envirox for a total cash consideration of SGD 84,902, thereby reducing the equity interest of ecoWise Solutions in Envirox from 98% to 85%.

:arrow: good, good lead-on ... even though their communications is not complete ...
[Finance disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought regarding investing of any stocks/ funds and/or whatsoever. The author has no vested interest in the mentioned stock at the time of writing.
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Re: EcoWise

Postby la papillion » Sat May 31, 2008 10:34 pm

When I read about Ecowise, I was quite disappointed with their investor relations since their website only provided 2 years worth of financial statements (which is the same for sgx announcement website) and one of the statements is actually truncated off. Looks like I have to rely on bits and pieces of information.

Let’s take a look at a few figures first. FY04 and FY05 have net losses. We’ll just see the latest three years to take note of the trend in the metrics.

-----------------------------------FY05-----------FY06-----------FY07
COGS (% to revenue)-------------65.7%----------46.7%----------43.9%
Gross margin----------------------34.3%----------53.3%----------56.1%
Net margin----------------------(-11.2%)---------18.9%----------22.5%
Financial leverage------------------1.7-------------1.6-------------1.7
Asset turnover---------------------0.7-------------1.0-------------1.0
ROE-----------------------------(-13.4%)---------31.3%----------35.9%

I saw a brief summary of their results in FY04 and FY05, both are losing money. Without any annual report, I’ve no idea why they are losing money. But let’s focus on the FY06 and FY07 where I have more information.

Here’s what I think:

1. Cost to goods sold has dropped tremendously from 65.7% to 43.9%. The management sited lower disposal cost contributed to this lower cost, thereby increasing their gross margins from 34.3% in FY05 to 56.1% in FY07. I wasn’t really satisfied with this kind of gloss over statement, but there’s not much I can do to find out more, given the sparse information from their website. Still, gross margin this high is pretty admirable. I wonder if there’s anything to compare with.

2. I realized that they had lots of ‘corporate activities’ like cash dividends, right shares and warrant issues. Really messed up the total number of shares outstanding, to the extent that I had problem deciding how many shares they had in a financial year. Looks like they needed lots of capital for something…I don’t know what. My guess is for their investment in a new crusher or their cogeneration plant…but I really don’t know since I can no longer find documents from sgx announcements website.

One interesting thing is that Ecowise had an acquisition on a company named Watertech Pte Ltd, which the founder later bought back (after citing disagreement for common ground and performance indicators). Ecowise made a net gain of $80,000. How come the discussion isn’t made properly before acquisition? So eager to get the company that there is not time to discuss? It’s fortunately that the founder of Watertech wishes to buy back at a higher price. Funny.

3. ROE increase seems to be driven by net margins improvements. At 22.5% in FY07, I think it’s a pretty good business. History is too short for me to comment much too.

4. Based on their financial leverage metric, it seems that Ecowise’s debt is rather stable. I calculated their Debts to Free cash flow for FY06 and FY07, it turns out to be 1.68 and 1.71 respectively. I hope their cashflow is enough to pay for their debts. Actually, the bulk of their FY07’s current liabilities is due to their trade and other payables (75.2% of total current liabilities), while the bulk of their long term liabilities comes from finance lease (78.2%). I don’t think there’s a problem paying off their liabilities at all, looking at their balance sheet.

5. Their revenue can be segmented into different business area, namely collection, processing, solutions and corporate. Let’s take a look:

** margin is based on profit before income tax as a ratio to revenues **

-----------------------collection------processing-------solutions-------corporate
Margins (FY06)-------13.4%-----------14.6%----------13.6%-----------198%
Margins (FY07)------10.8%------------16.9%----------974%------------71.5%

** Due to eliminations, I can’t find the % of each business segment’s contribution to the total revenue **



If I’m not wrong, there are 3 new streams of revenue. I’m not sure if these are to be subsumed under the above 4 business areas. There is absolutely no mention of any plans by ecowise in their financial statements nor their website. I had to piece the information below myself, so I might be wrong.

a) Carbon credit sale – their wholly owned subsidiary signs ERPA with Kansai Electric Power Co Inc in Japan, for the sale of up to 95,000 certified emission reduction certificates, equivalent to 95,000 tonnes of carbon dioxide emitted into the atmosphere which would have been emitted otherwise. The ERPA will be for carbon credits generated from early 2008 until end of 2012.

Since ecowise is the first registered company to do such sale, I think it shows their expertise in this area. I admit, half the time, I’m not sure what they are talking about. I only know that Ecowise plans to leverage their expertise as a Clean development mechanism (CDM) project developer, whatever that means.

b) Their new cogeneration plant that can generate electricity and heat from renewable biomass like wood and horticulture waste. This new plant, if I’m not wrong, can be a new revenue stream as their can sell either the technology or the electricity generated. Okay, I’m not really sure, and I can’t find any information on it. But one thing for sure is that ecowise is using their own generated steam (for heating) and electricity for its production and process, hence reducing the use of diesel and grid electricity, hence their cost should go down even more.

c) Ecowise forms a JV with Holcim, one of the world’s leading cement and aggregates suppliers, to purpose of which is to maintain and operate an industrial materials recycling and processing plant to recycle and process used copper slag in Singapore. Joint research and development facility set up will also seek new alternative sources of fuels and raw materials towards sustainable developments in construction and building materials.

I got to admit, this is their most exciting venture as the prospects could potentially be good. It is stated explicitly by the management that this is JV will be the cornerstone of their continued growth in the coming years. They are working together to create an eco-concrete for construction companies, amidst the high construction activity in Singapore. Processed copper slag can be mixed into ready-mix concrete as an alternative to sand. Sounds exciting.

Though I can’t find the exact contribution to the total revenue based on the 4 business segments, I can approximate it. It’s takes up a huge chunk of the total revenue for sure, with solutions and corporate forming a very small percentage. I’m wondering why in page 9 of their FY07 report that the eliminations is so high. Contract got cancelled? What happened? Even in FY06 too. No mentions ofthe high eliminations in both FY06 and FY07 by management. This is a red flag to me.



A few important questions:

1) Ecowise’s core business of collection of used copper slags and general waste for shipyards and fabrication yards in Singapore. It is stated that the collection fees are charged based on per trip basis or tonnage. Where do those ships come from? Will the ships be affected by a highly possible decline in demands over at US?

2) For their processing business, it is the recycling of used copper slag used for surface treatment by shipyards and fabrication yards. So again, will the possible decline in demands from US affect the shipyards/fabrication plant business, and in turn affect Ecowise’s revenue?

3) Is Singapore ready for the green evolution? Could this be a concept stock that won’t take off because others are not ready?



Summary:

A severely lacking Investor relations in Ecowise’s website AND the sparse information given by the management in the statements PLUS the lack of a clear plan makes this little company a hard nut to crack.
An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return - Benjamin Graham
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Re: EcoWise

Postby helios » Sat May 31, 2008 11:02 pm

dear la-pap,

(u r my new idol liao*; thank u for your analysis)

from my point of view, their corporate finance PR (& communications) r not well-done in accordance to SGX-ST listing rules, 703 particularly for disclosure .... erm ...

Listing Rule 703(1) states that an issuer must make immediate announcement of any information known to the issuer concerning it or any of its subsidiaries or associated companies which:

(a) is necessary to avoid the establishment of a false market in the issuer’s securities; or
(b) would be likely to materially affect the price or value of its securities.


on e contrary, their chart growth is relatively stable, (consolidating ard 0.19 - 0.20 & forming a baseline), i was trading w it some months back. currently, not vested, as i wanted to find out more info. on its progression b4 gtg LT.

Image
Last edited by helios on Sat May 31, 2008 11:37 pm, edited 1 time in total.
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Re: EcoWise

Postby la papillion » Sat May 31, 2008 11:27 pm

Hoho, i wonder who your old idol is :)

I wouldn't rely so much on technical analysis for ecowise because it's pretty illiquid with low volume. But based on the chart, we see a protracted downtrend line since nov 7, with price testing again on 15 jan 08 and 9th may 08. Only if the price goes above this downtrend line (around 0.215) then I'll expect a more bullish trend. That being said, it's supported by a short term uptrend line too. Time will tell how it'll play out, which we'll see latest by 3rd week of June. A rebound of the price is due, I suppose.

On weekly chart, price is well supported by ema 20 week though, so a drop below 0.190/0.195 might spell trouble.

My verdict: Don't trade this stock! It's too illiquid and the bid spread might get a little wide at times. Long term wise, a big question mark in my opinion. I won't put more than 5% into this unproven, conceptual business. Their investor relationships is another big minus for me.

BTW, how do you do put those images? i tried but it wouldn't come out in the preview :(
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Re: EcoWise

Postby blid2def » Sat May 31, 2008 11:51 pm

La Pap, this way:

Code: Select all
[img]<image url>[/img]


Some sites don't allow hotlinking of images, though - I'm not sure if that's the problem you're running into, or if it's just a matter of the img bbcodes you had problems with?
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Re: EcoWise

Postby la papillion » Sun Jun 01, 2008 12:03 am

thks!

I tried that, but didn't work out. I tried to link from the images i uploaded on blogger, can't work.
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Re: EcoWise

Postby blid2def » Sun Jun 01, 2008 12:12 am

Hmm, can you post the link itself here? Lemme see what's wrong. You can wrap the URL in the "code" BBCode tags or just check the "Do not automatically parse URLs" checkbox below the reply box so I can see the full text for the URL.

Thanks. :)
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Re: EcoWise

Postby helios » Fri Jun 13, 2008 3:29 pm

la papillion wrote:But based on the chart, we see a protracted downtrend line since nov 7, with price testing again on 15 jan 08 and 9th may 08. Only if the price goes above this downtrend line (around 0.215) then I'll expect a more bullish trend. That being said, it's supported by a short term uptrend line too. Time will tell how it'll play out, which we'll see latest by 3rd week of June. A rebound of the price is due, I suppose.

On weekly chart, price is well supported by ema 20 week though, so a drop below 0.190/0.195 might spell trouble.


>>>Thanks to La Pap, for his analysis & alert that e half year results r out, yes, we cld be seeing a dip @ 0.190 level.

>>> let's see e communicating messages sent out
(in my opinion, seemed to have ambiguousity):

(in S$’m) 2008 2007 %
Change
Revenue 10.4 11.7 (11.1)
Gross Profit 5.4 6.3 (13.3)
Gross Profit Margin (%) 51.9 53.2 - 1.2 % pt
Profit Before Tax 7.5 3.5 +116.5
Net Profit After Tax 6.6 2.8 +133.7
Net Profit Margin (%) 63.5 22.3 +41.2% pt

Revenue for 1H FY2008 was S$10.4 million, a declined of 11.1% from S$11.7 million for the 6 months ended 30 April 2007 (“1H FY2007”). A lower revenue was registered due to fewer surface blasting activities and consequently, lower volume of used copper slag were collected. However, there were increased activities at the horticulture materials recycling park at Lim Chu Kang and biomass cogeneration plant.

Gross profit, in tandem with the decline in revenue, drop13.3% to S$5.4 million in 1H FY2008 from S$6.3 million in 1H FY2007. Gross profit margin declined from 53.2% in 1H FY2007 to 51.9% in 1H FY2008. This is mainly due to the increase in operation cost as a result of higher diesel price.

The Group had previously announced its joint venture with Holcim Singapore Pte Ltd to maintain and operate an industrial materials recycling and processing plant to recycle and process used copper slag. In addition, the joint venture also includes the setting up of a research and development facility to develop alternative sources of fuels and raw materials that can be used in the manufacture of cement, building and construction materials. As part of the agreement, Holcim Singapore has paid approximately S$5.1 million for a 50% stake in ecoWise Materials Pte Ltd, a new subsidiary formed for the above purposes. The used copper slag business still remains within the Group.

>>> my feel, could be it a failure in realign'g e copper slag biz bet e JV operator that results in lower collection of copper slag? operational issues? why is there a reduced surface blasting activities, & not explained? ambigious ...

This transaction resulted in a gain of S$4.7 million in the Group’s income statement. Hence, net profit after tax rose 133.7% to S$6.6 million in 1H FY2008 from S$2.8 million in 1H FY2007.

Commenting on the Group’s performance, Mr Lee Thiam Seng, Chief Executive Officer, ecoWise Holdings Limited said “Overall, we are pleased with the set of results posted. Although affected by the reduced surface blasting activities in the 1H FY2008, we remain positive of our collection and recovery of used copper slag business as ship repairs and maintenance activities remain buoyant in Singapore. The positive net cash flow from our operating activities together with the proceeds from the joint venture with Holcim Singapore has indeed strengthened our financial position to fund and undertake new ventures.”

On 9 June 2008, the Group announced its long term strategic initiative to invigorate its renewable energy segment. It has established ecoWise Energy Pte Ltd to identify opportunities, inject suitable technology solutions, invest in and further develop projects in the renewable energy sector in the South East Asian Region. To fund its growth, ecoWise Energy will be able to tap on the Group’s strong capital resources and its access to capital markets.

>>>what r e TURNING-KEY project developments? are we refer to what La pap has mentioned on e new cogeneration plant that can generate electricity and heat from renewable biomass like wood and horticulture waste?

>>> again, no mentioned on e wastewater engineering of e Envirox, ecowise solutions biz ...
[Finance disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought regarding investing of any stocks/ funds and/or whatsoever. The author has no vested interest in the mentioned stock at the time of writing.
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Re: EcoWise

Postby la papillion » Sun Jun 15, 2008 11:44 pm

Hi san,

I guess it's their usual practice not to comment so much. That's something I always don't like about ecowise's PR. Just take a look at their site...ill maintained.

The problems faced by their core business of copper slags seem very real now. Without the one-off gain, their revenue actually dropped. I think new developments to look out for is their carbon credit business. Only listed company in singapore to trade carbon credits. I wonder what kind of business we're looking at. Could be seeing a big boom or a big bomb :)
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