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Green Build Technology - Navigating the Green Story but with Execution Risks

Shared By Stock Fanatic on Friday, November 6, 2015 | 6.11.15

What is the news?
We attended a site visit to Green Build Technology (GBT) in Harbin, Heilongjiang province, China in Oct-15. From the trip, we were able to gain insights through the management’s sharing of the new business direction by venturing into energy conservation and sustainable development projects. First-hand opportunities were also given to visit the existing project sites in Harbin, and view the progress of the two ongoing projects.

■ Switch of business direction after the disposal of its packaging business.

■ Visited project sites regarding the heat insulation projects involving the upgrade of existing residential buildings in Harbin city.

■ Visited construction sites of the 12 kilometres-long underground utility tunnel (UUT) project.

■ Revenue inflow after the completion of projects beginning in 31 Dec-15.

Pollution remains as one of the utmost priorities for the Chinese Government to tackle amid health hazards and the negative effects on economic growth.

While we note that revenue inflows will begin shortly after the completion of existing projects, however, we are neutral on GBT amid the sustainability of future project wins, where time is required for the company to build a credible track record.

Company Background
Formerly known as Youyue International (previously Youcan Foods International), the company was subsequently renamed to GBT after acquiring Harbin Promlite Energy Saving Technology Co. Following the disposal of its business in the manufacturing and sale of flexible packaging products in Dec-14, GBT has recalibrated its focus and will primarily focus on project-based activities in energy conservation and sustainable developments.

Removal from Singapore Exchange Securities Trading (SGX-ST) watch-list in Jan-15. Youyue International was placed on the SGX-ST watch-list since 5 Mar-12, for recording three years of consecutive pre-tax losses and having a market capitalisation of less than S$40 mn over the last 120 trading days. As the company’s earnings returned to the black in FY13 and FY14, and having restoring its market capitalisation to in excess of S$40 mn over the past 120 trading days, the company was subsequently removed from the SGX-ST watch-list with effect from 21 Jan-15.

Technical Analysis
Daily Chart
No contributions of revenue from green technology business in 1H15. In 1H15, revenue gained 7.3% y-o-y to RMB113 mn although there were no contributions from the green technology segment, as no projects had substantial work done or were completed during the time period. However, with a significant growth in administrative expenses at the green technology segment and foreign exchange losses, as well as income taxes which were unable to be offset from losses incurred in the green technology segment, bottom line losses expanded to RMB3.1 mn from RMB0.4 mn in 1H14. (Read Report)

Source : Phillip Securities Research

Posted on Friday, November 6, 2015 | 6.11.15
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