Up-to-date in 60 seconds
Background: HanKore Environmental was previously known as Bio-Treat Technology. It is a China-based waste and wastewater treatment company which engages in BOT, TOT and BTO utilities projects for municipal governments.
Recent development: Previously stricken with the default of its convertible loan, Bio-treat has re-emerged with new shareholders, a new management team, a restructured board, together with a name change to HanKore as it shakes off its beleaguered past. The company has since paid off its debt and is determined to build its position as a leading water service environmental technology group.
Key ratios…
Price-to-earnings: n.m.
Price-to-NTA: 0.8x
Dividend per share / yield: S$0.00 /0%
Net cash/(debt) per share: (S$0.021)
Net gearing: 32%
Share price (S$) 0.045
Issued shares (m) 4,141.2
Market cap (S$ m) 186.35
Free float (%) 62%
Recent fundraising activities Nov 2011: S$37.0m from rights issue, Apr 2011: S$48.1m from new share issue
Financial YE 30 Jun
Major shareholders Giant Delight (19.2%), Firstree group (8.2%), Ancient Jade (5.4%)
YTD change 0%
52 week px range 0.028 – 0.0864
Our view
Aims to increase water capacity. With 14 municipal water & wastewater treatment projects in China, HanKore’s current contracted BOT/TOT capacity is 1.4m tons/day, in which it has built about 1.0m tons/day of capacity. Its aim is to achieve water capacity of 5m tons/day in 3 years and double it to 10m tons/day in 5 years. The underlying demand would come from China’s 12th 5-year plan in which it aims to double its daily wastewater treatment capacity to 90m tons by 2015.
Targeting high-growth areas. HanKore has identified 3 specific regions: (1) Shaanxi, (2) Chongqing and (3) Jiangsu which it views as high growth markets in China and it would concentrate its efforts in these areas. It also seeks to extend its business overseas to markets like Middle East, Africa and the ASEAN region.
Sources of future increases in cashflows. HanKore is applying for increases in treatment fees for some of its plants. At the same time, it hopes to commence building the next phases of other plants which could generate more cashflow on completion. New projects would also be another source of increased cashflow.
Possibility of a turnaround in FYJun12. FYJun11 came in at a net loss of RMB405.7m due to exceptional items of RMB399.4m and project overrun on prior year projects of RMB62.8m. If these items are excluded, HanKore’s EBT would have been RMB27.5m. The possibility of HanKore returning to profitability in FYJun12 appears high. The stock currently trades at 0.7x book value.
No comments:
Post a Comment