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China Enersave
July 7, 2007, 9:04 am
Filed under: companies analysis

China Enersave (SGX:531)

As of 6 July 2007

  • 1 SGD : 5 RMB
  • EPS: 0.008/share
  • P/E ratio: 24.4
  • Earnings Yield: 3.8%
  • 52 Week High: 0.235
  • 52 Week Low: 0.150

The One Minute Story

China EnerSave runs biomass power plants and conventional coal plants and provides engineering services.

Financial Analysis (in SGD)

YEAR

2006

2005

2004

2003

2002

Book Value Per Share

0.200

0.160

 

 

 

Cash Per Share

 

 

 

 

 

Cash Flow Per Share

0.023

-0.020

 

 

 

Earnings Per Share

0.008

0.005

 

 

 

Dividend Per Share

0.000

0.000

 

 

 

Dividend Payout Ratio

N/A

N/A

 

 

 

Net Profit Margin

23.2%

4.8%

 

 

 

Return on Total Assets

1.3%

0.8%

 

 

 

Return on Equity

3.1%

2.5%

 

 

 

Current Ratio

1.0

0.7

 

 

 

Long Term Debt of Capitalisation

109.9%

100.2%

 

 

 

A lot of debt, poor ROE. Net profit margin is good only in 2006, we will never know if it is sustainable.

Why Buy

  • A concept play on China’s move towards renewable and clean energy.
  • China Enersave might streamline the business to focus solely on biomass plants.
  • The raw material required for production of energy, namely biomass, isn’t expensive, which might aid profit margins.

Why Not Buy

  • This stock is ultimately speculative. Profit margins are not steady, business is not focused.
  • Low ROE seems to indicate inefficient management.
  • The company has a lot of debt; it remains to be seen whether they can service the debt.

Potential Problems

  • Lack of clear business focus
  • Regulations in the energy industry
  • Rising cost of organic waste

Strategy

  • Monitor for consistent performance
  • Watch out for streamlining of business activities

Links

http://forum.channelnewsasia.com/viewtopic.php?p=1065528&sid=02c2a1a36bba1b8c9b83644f11be194c

http://www.planetark.org/dailynewsstory.cfm/newsid/38480/story.htm

Disclaimer: The author bears no responsibility for any financial losses caused by reliance on the author’s views. Investors are advised to do their own research before making their investment decisions.

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