Auhua Clean Share Discussion Threads

[cascudi] 12/9/2013 18:42

Thanks a lot woody for the analysis

[woodcutter] 12/9/2013 14:56

Cascudi- i made an error on debtor days, apologies they are interims not prelims, i was rather rushed this morning. Anyway i looked at it briefly on the basis of revenue, profit and cashflow and the cashflow is dreadful as it is with most if not all AIM floated chinese co's. If you've the time research it you'll see what i mean if you're diligent enough in your research.

I generally look at cashflow and as you rightly point out ROCE and the historic PER i only use EBIT/Enterprise value when comparing companies with differing debt positions in the same sector. I also use TA and Candlestick patterns a lot too.

I'm not interested unless there is decent cashflow where the operating cashflow is somewhere near the profits and in the case of software companies i need to be sure the capitalised spend does not distort the profit and cashflow figures too.

fwiw i make ROCE as follows (i've not used the average method)
pbi&t 66m rmb (assumed H1 and H2 comparable)
total assets 207m rmb
current liabilities 43m rmb
ROCE 40%

But this is very misleading as there are 82m rmb of receivables in the assets inflating the ROCE so it's a pretty useless measure in this case imv.

Net tangible asset value 155m rmb
shares in issue 64m
NTAV/share 2.42rmb @ exch 10/1 24.2p

Again this is a pointless figure as the NTAV includes the receivables.
For me it's really not worth proceding with any further investment research as the figures are prejudiced by the cashflow/receivables position.

It might have been helpful if they'd have given the time frame (3months, 6months etc) for the payment of receivables as many co's do.

I have looked at a significant number of chinese floated AIM companies and they've all been the same lots of profit and no cash! I even invested in one against all my better judgement and years of experience and lost a little money.


aimho

Woody

[cascudi] 12/9/2013 10:35

Hi Woody.. I agree 267 days of debtor is not great.. but it seems correct me if I am wrong that ROCE is 30.7% and net tangible asset per share is 24.5p
Is correct to say that smart P/E (Enterprise value / profit after tax) is about 0.3 if I haven`t done a mistake?
what is your opinion? also do you think that this new regulation will boot more the revenue? I am not expert of this comany and sector.. just like to look the numbers

[woodcutter] 12/9/2013 08:37

another typical chinese aim co i'm afraid.

Good sales and profits................BUT massive increase in receivables and poor cashflow!

H1 Revenue 110m RMB
Receivables 81m RMB 37% of full year revenue or 133 debtor days
Operating profit 33m RMB
Operating cashflow 9m RMB

There's your answer on the share price drop............cashflow

Thought this looked interesting this morning but after brief review no different from other chinese aim co's so won't be revisiting. At some point when they've ran out of cash supporting their clients expect a placing.

Woody

post note apologies...........interims not finals so debtor days only 133. Still and most importantly cashflow very poor. orginal post edited.

[cascudi] 12/9/2013 08:34

From today half report

Highlights
-- Revenue increased by 15% to RMB 110.3 million: GBP 11.8 million (30 June 2012: RMB 95.6 million: GBP 9.7 million) driven by good demand.
-- Strong focus on selling to property developers resulted in a 12.9% increase in number of units sold to 35,000 (30 June 2012: 31,000).
-- Gross profit grew by 21% to RMB 51.7 million: GBP 5.5 million (30 June 2012: RMB 42.8 million: GBP 4.3 million) and gross margins improved to 47% (30 June 2012: 45%) as the bulk of 1H projects were sold directly to property developers.
-- Net profit before tax of RMB 32.5 million: GBP 3.5 million (30 June 2012: RMB 32.1 million: GBP 3.2 million).
-- Net assets of RMB 155.5 million: GBP 16.7 million (30 June 2012: RMB 110.3 million: GBP 11.2 million).
-- Cash balances at 30 June 2013 of RMB 40.3 million: GBP 4.3 million (30 June 2012: RMB 32.7 million: GBP 3.3 million).
-- Earnings per share at half year of RMB 0.37: 4.0 pence (30 June 2012: RMB 0.38: 3.8 pence).


In 2012, China solar water heater production has risen to 63.9 million square meters at a growth rate of 10.7% or so, with total inventory of roughly 258 million square meters. (source: Global Status Report)
Currently dominated by unibody systems purchased by end consumers, the Shandong government is shifting its focus to promote split-unit water heater systems to property developers. Consequently they have introduced regulations to increase demand by requiring all buildings with more than 12 floors (which traditional unibody systems cannot support) to utilise solar water heater systems. Government subsidies are also available to property developers when they incorporate solar water heater systems into their building plans.

[andrbea] 30/4/2013 18:50

as he says in the interview, reasonable figures:

- Group revenue grew strongly by 30% to RMB 218.3 million: GBP 21.8 million (2011: RMB 168.5 million: GBP 16.2 million)

-- Gross profit up by 28.8% to RMB 100.5 million : GBP 10.0 million (2011: RMB 78.0 million: GBP 7.5 million)

-- Profit before tax up by 9.5% to RMB 62.5 million: GBP 6.2 million (2011: RMB 57.1 million: GBP 5.5 million)

[kayha2] 30/4/2013 16:18

Have just seen that an interview with the chairman has been released here:

[giant steps] 26/4/2013 11:57

Plus be mindful of combined 63% holding by two directors

[britishb] 26/4/2013 11:50

Yes, it looks a bit iffy and smells horrific.....

[greasynut] 26/4/2013 11:19

Looks good on the numbers, but one should apply the usual caveats when considering Chinese companies.

One point in the notes looks a bit iffy:
'However, the Company does not hold any cash and, due to Chinese regulations, it can be difficult to extract money out of the trading subsidiaries to pass to the Company so that it can settle its debts. As a result, there is the risk that the Company, and subsequently, the Group, may not be a going concern as the Company may be unable to meet its debts as they fall due. Accordingly, the Directors have sought and obtained the support of the major shareholder of the Company to provide advances to the Company to meet its working capital requirements should the need arise.'

No chance of a divi for the forseeable...

[hectorp] 26/4/2013 07:39

This plummeted from 45p to 20p in several months but why? Results dont look at all bad.. sector out of favour maybe?
Should pick up a few .

[lucky_punter] 18/1/2013 08:46

Auhua Clean Energy goes against type in a sector that has tended to over-promise and under-deliver.
It is a profitable and cash generative green story on a trajectory that really does mark it out as a growth stock.

[john ford timmins] 13/12/2012 11:23

Interview with CEO

[lucky_punter] 21/6/2012 14:29

Northland Capital has started coverage of Auhua Clean Energy (LON:ACE) a day after the China focused renewable power firm reported strong full-year results, the first such report since Auhua listed on AIM in April.

Analyst Andy Hanson has initiated the company with a 'buy' recommendation and a 50 pence price target. The stock was last trading at 38 pence.

[andrbea] 03/4/2012 13:42

Today the AIM market welcomed China focused renewable power firm Auhua Clean Energy (LON:ACE) as it made its debut on London's junior market.

The Shandong based firm, which makes solar powered water heating systems, raised £1 million in new capital alongside its AIM listing. Auhua will use this money to aid its expansion plans.

Currently priced at 44.5p the stock has made its debut at a notable premium to the 40p placing price. At the current price Auhua is valued at £28.29 million.

Chinese government targets for the solar water heating system market, would see a quarter of Chinese homes using such systems by 2020, Auhua says.

The firm was established in 2002 it is currently able to produce around 90,000 units each year, and this could reach 150,000 units a year once its new factory reaches peak capacity.

[thenorth] 14/2/2012 08:26

It has been three years since credit hire operator Accident Exchange launched its legal battle
against rate surveyor Autofocus.
Then the dispute simply revolved around Accident Exchange threatening to sue now-defunct
Autofocus for providing "dishonest" rate evidence. However, it has now escalated to become a
major story embroiling a host of major insurers including RSA, Aviva, Axa and NFU Mutual, as
well as the entire CHO market and,
potentially, parliament.
Also, what was previously a slow-burner, is beginning to come to the boil after the Court of
Appeal came down in favour of Accident Exchange in four test cases, three involving RSBI and
the other, Sabre Insurance on 31 January.
A day later the Royal Courts of Justice granted Accident Exchange permission to apply to
commit seven former Autofocus employees to prison, Lord Justice Moses stating that the
allegations were of perjury on an "industrial scale".
RBSI and Sabre have settled out of court with Accident Exchange, putting 900 cases to bed,
while RSA is also in discussions with the CHO over a settlement.
Tainted evidence
Seven more test cases involving Aviva, NFU Mutual and Brit are due before the Court of Appeal
on 16 February. At the same hearing, Accident Exchange will ask the court how to proceed with
the remaining 3600 cases, where it claims "tainted" Autofocus evidence was used.
Despite the mounting evidence against Autofocus and damning statements made by top judges,
Axa, the insurer with the largest Autofocus exposure, intends to stand by its credit hire
settlements.
Axa's claims and underwriting director, David Williams, said: "Axa Commercial Lines in no way
condones any breach of legal process. Axa appointed Autofocus to carry out specific elements of
work, which it was the acknowledged experts in, and used widely for throughout the market.
"As we have previously stated, despite the issues surrounding Autofocus staff not following
correct processes, the amounts offered in settlement by Axa were fair and reasonable."
NFU Mutual has taken a similar stance, arguing that the Association of British Insurers' General
Terms of Agreement was not always sufficient: "It is not always possible to settle credit hire
claims under the terms of this agreement. In the past, for cases such as these, NFU Mutual - like
many other motor insurers -
used a company called Autofocus. This arrangement was made in good faith to provide expert
and independent evidence to challenge what we considered to be overstated credit hire claims.
"Following reports that some of the evidence provided by Autofocus was not always reliable, we
are, of course, reviewing a number of cases to ensure they were settled correctly."
Question of integrity
But the chief executive of Accident Exchange, Steve Evans, has criticised insurers for failing to
question Autofocus' integrity earlier: "Insurers should have audited Autofocus but they did not."
Although Evans has an outstanding 3600 cases, if the other credit hire firms that have made
settlements based on Autofocus evidence re-open their books, the figure could be as high as 18
600. AI Claims, Helphire and Drive Assist have all confirmed they are reviewing settlements
where Autofocus was involved.
Helphire CEO Martin Ward told Post if it found cases where recoveries could be made it would
approach the insurer in the first instance.
He added: "There was no reason to believe Autofocus was anything other than independent and
professional. If the allegations of perjury and mass fraud are true, then we have all been duped."
Ralph Ferguson, claims director at Drive Assist, said that his company was to review its cases
where Autofocus was used, but that only a small number would be affected. He branded the
Autofocus revelations "shocking".
AI Claims commercial director Chris Shaw added: "Perhaps there will be cases in all our closed
lockers where we have settled, or decided not to litigate because of Autofocus evidence. Many
firms will be affected by this."
In light of the recent news, Evans has written to Labour MP Jack Straw, criticising the former
Home Secretary's "aggressive stance" on CHOs and urging him to investigate insurers' roles in
credit hire.
Evans called on parliament to question the justification that "the man on the street is
disadvantaged in the pursuit of justice because parliament believes that insurers will always do
the right thing".
Evans concluded: "I suggest you ask how it is that insurers have benefitted materially from the
efforts of a criminal enterprise over the past five years or so, and then did nothing to address the
issues when they were alerted to it in 2009 and now have the audacity to petition parliament, and
anyone else, that they are in some way an underdog being exploited by a sector they actively
support and work with."
Shaw explained that the recent court cases could not have come at a worse time. "Insurers have
portrayed themselves as having a tough time and the government has built up so much steam to
highlight how difficult it has been for them, then it turns out they have been potentially mass
defrauding organisations," he said.
"If 100% of Autofocus' instructions were from insurers wanting proof that the rates it charged
were too high, you have to question its independence. If an organisation is told a firm it is using
is fraudulent, the very least it can do is investigate the company. Insurers should have suspended
using Autofocus and investigated it. They did not because the evidence Autofocus was giving
them saved them a lot of money. They put profit before compliance."
Justifying premiums
Martin Andrews, director general of trade association the Credit Hire Organisation, added: "The
insurance industry complained to regulators about the increasing costs to try and justify rising
motor insurance premiums.
"The scale of the fraud is epic. Autofocus was not independent. I'm sure the majority of its
revenue came from preparing those reports on behalf of the insurers. It is absolutely scandalous
and judges should be appalled.
"The insurers should hang their heads in shame but that does not solve anything. They need to
step up to the plate and deal with those claims where Autofocus was involved."
In conclusion, Evans hopes the cases will reinforce the GTA's value. "One positive is that
insurers are as disappointed about the Autofocus evidence they have been relying on as we are.
This will bring the credit hire industry and the insurance industry closer together on the benefits
of the GTA. These rating issues occurred because they were working outside the GTA," he said.

[sir rational] 14/11/2011 19:12

You guys should have listened to my warnings.

[nicky name] 03/2/2011 00:58

I should have followed Evil Knievel who I think held onto his ACE shares post de-listing.
Oh well, win some lose some, and it might be sometime before anyone can sell!?

[dyfiman] 02/2/2011 12:46

any implications for those that did not sell shares before
de-listing? Rgds.

[baner] 02/2/2011 12:04

the £50m convertible (plus accrued interest) was indeed converted into new ordinary shares at 30p - i saw the swede Gillenhammer bought tons of these just before the delisting at 2p-ish - clever move no doubt!!

[thenorth] 02/2/2011 11:31

Oh and it was debt for equity swap at 30p a share....

[thenorth] 02/2/2011 11:29

Latest news for those that are intrested....



2nd February 2011

Accident Exchange remove £50m debt
• Positive new banking terms agreed too

Accident Exchange, the accident management and onward mobility solutions provider, has reduced its debt liability by £50m in a deal which provides a 'significant financial footing' for the business.

Separately, the Birmingham headquartered operation has secured a new 3-year Credit Agreement with its Senior Lender, Morgan Stanley, to extend £43m of working capital facilities until December 2013.

The £50m liability in the form of Convertible Loan Notes - which was originally due for repayment at the end of 2013 - has been erased in a debt for equity deal.

Shareholders unanimously approved the new arrangement at an EGM held yesterday (1st February 2010).

"Both deals materially strengthen the balance sheet," explains Steve Evans, chief executive of Accident Exchange.

"It gives us a significant financial footing to continue the consolidation and development of our services to the 1300 dealer, bodyshop and manufacturer clients we currently support."

Evans feels the "unequivocal backing" from the likes of Morgan Stanley, especially in the current economic climate, represents a major boost to the business.

He says: "It shows the faith blue chip financial institutions have in our model that they're willing to be part of our future as shareholders rather than just external lenders."

ENDS

[nicky name] 01/2/2011 12:30

Shame I sold out just before delisting at 1.5p then. Shareholding was still worth a few hundred quid which at the time I thought was better than nothing.
At the time I was just not at all confident I would ever see the money again. I just couldn't find enough info to make a proper decision.
At least the market makers and those in the know made a few quid at my expense.
I put the small sum I got for them into more Helphire shares, so I am hopeful I can recoup at least some of my ACE losses.
I still have a feeling that ACE and Helphire will become aquisition targets.

[baner] 20/1/2011 09:15

not as far as i can see - however it should be underlined the convertibles were not worth the full par value but maybe, say, 50%. so the new conversion price is maybe rather 15p - still a heck of a deal for those who bought the shares at 3p just before the de-listing!

[scburbs] 20/1/2011 08:52

Baner, I am not a shareholder, but have been following the company. A debt for equity swap at 30p would be an astoundingly good result for "old" shareholders. It seems crazily generous to me, are there other conditions/benefits attached or a share consolidation that would impact on the effective conversion price?