EcoWise 5CT

[helios]

nope pal.

check'g, according to e IR Co.:

this announcement is basically informing the public that Ecohub has exercised their warrants for more shares. To the best of our knowledge, there's no specific intended usage of this additional fund received from this exercise.

we r detectives ... ho ho ho ... yes, there's a free transport offered by e IR company.

(... in fact, in april, i also visited Sulo, btw their operations r merging w veolia environmentals.)

[la papillion]

Ecowise is going to give a special interim dividend cash dividend of $0.01 per ordinary share (http://info.sgx.com/webcoranncatth.nsf/ ... penelement) for the financial year ending 31st Oct, 2008. At the same time, they are proposing a rights issue of 214,165,181 new shares at an issue price of $0.01 for each proposed right shares, on the basis of 1 rights share for every 2 shares held, disregarding fractional entitlements.

My take:

Hmm, didn't Ecowise did such a thing not too long ago? Digging out the old archives, I found that on 24-Jul-2007, they did put an announcement to propose a cash dividend and rights cum warrants issue(http://info.sgx.com/webcoranncatth.nsf/ ... penelement). Back then, the special interim tax exempt cash dividend for the financial year ending 31st Oct, 2007, is $0.03 net per ordinary share. They also proposed a rights issue of 249,975,000 new shares at an issue price of $0.01 per rights share with detachable free warrants. Each warrant carries the right to subscribe for 1 new share at an exercise price of $0.05. So back then, every 1 share held entitles the holder to 3 rights share and 1 warrant. Complicated? Yes, I thought so too.

Oh, so now, after nearly 1 year, they wanted to give out another 'special' interim dividend, coupled with rights shares but no warrants. It's not so 'special' if they did it for two successive years!

This is seriously going to dampen their share price in the short term. But it begets a more serious question - what do they need the new capital for? Are they concerned about existing shareholders by diluting their share holdings again and again? Take a look below:

Based on today (date of announcement):
Share capital: 376,067,246
Outstanding warrants: 52,263,116
Potential rights issue: 249,975,000

This can seriously affect EPS, considering the huge dilutive effect of the rights issue. It's going to nearly half the EPS ... goodness.

[helios]

yo la pap, u r a fast mover ... goodness!

yes, our joss-sticks came true ya? after e enquiry raised to e IR Co.

thinking: u know, who's their independent audit?

[la papillion]

Hi san, dunno leh, who's independent audit? Does it matter?

[la papillion]

Ecowise latest 'scam' seems well received by people. Share price jumped 7.5% to 0.215 - though the cause of this jump might not be due entirely to the announcement.

[helios]

don't know, can't comment now.

we all r not operators who run e biz

when got time, dig into independ. audit committee?

it's a learning process for all.

(i'm out of this trade for now - see next year lar - however, am still keen to follow their story).

hey, when u r free, pls tell me, so we go and ask questions on e field visit.
that's e advantage of following sgx Co.

[chaibu]

Auditor: RSM Chio Lim effective from year ending 31 Oct 2007.

Those (or some of them) who had a bite of the cherry last year may well be looking for a second bite. Those who missed may see this as a second chance.

Some background....similiar announcement around this time last year - details

1) special dividend TE 3 cents p/share
2) rights 3:1 @ 1 cent p/share with
3) attached warrant 1:1 free....exercise price 5 cents

The cherry......traded to a high of 0.90 and ex traded from 0.20 to 0.29 before returning to the 0.20 level

[helios]

good note on e *cherry, chaibu (or durian, yeah?)

from a macro view, some friends were in e trade last year, i rem coz e BT article came out quite timely - aided by e local media to shore up "talking-point" publicity for this lowly-addressed counter. [they've some bitez though].

unless one knows what e actual usage of e raised capital, one might be trading on unknown grds?

i still like this cherry**, but adopted a wait-n-see on e corporate growth part, esp. on e biogas and biomass new BUs.

AOR (at own risk)

[chaibu]

Ah, San2......durian?

We may well be sitting under a durain tree watching for cherries. A harzardous thing to do if we do have a hard hat on.

"from a macro view, some friends were in e trade last year, i rem coz e BT article came out quite timely - aided by e local media to shore up "talking-point" publicity for this lowly-addressed counter. [they've some bitez though]."

That was a timely prelude to the Dividend/Rights/Warrant announcement a month later. I was quite lucky enough to have stumbled on it earlier thinking I saw a cherry tree though a tad slower. The numbers were quite compelling. The EPS for the year ended 31 Oct 06 was 4.3c. At 30c then it was a reasonable price to pay.

That and gut feel and perhaps itchy fingers led to a small position just to follow the story. Follow I did and during the due diligence the cherries just grew on me. What was it?

1) The company took delivery of a second wood crusher in Feb 2005 and a third one in 2006.
2) The Biomass Cogeneration plant was up and running since Feb 2005.

The 1H07 results confirm the story.....EPS 3.1c. For the full year it was 5.8c. By deduction the 2H was weaker and weakness spill over to the 1H09. It appears the cherry tree is not as healthy as before.

Right now the co has $10.3m in cash and borrowings of $1.7m. No capex demand. Maximum payout for the upcoming bonus dividend (assuming the remaining warrants are converted) amount to $4.3m (or is it $4.8m?). Rights if fully taken up amount to half the payout.

I suppose the negative aspect is dilution

[helios]

yo, chaibu,

i bought ecowise as ipo stock in 2005. this was one of the earlier stocks i bought on someone's recommendation.

i blurred blurred, and sat on it for many moons as my priority was not placed on stock markets during that era.

when i recalled this, i sold it in late-2006 at 1.9c?
aiyo, it was the wrong decision made. i missed the cherry-plucking-window opportunity in 2007.
[heart-broken].

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?

Yes, i was trading with it for a while end last year to fund my TA course ... i shared this with la pap. initially, i was surprised that la pap was quite into it.

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

appreciated.