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Share7 ( Date: 01-Sep-2013 17:18) Posted:
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leeeta ( Date: 01-Sep-2013 17:19) Posted:
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cccx123 ( Date: 01-Sep-2013 13:18) Posted:
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Hope this helps HK on Monday!!
China official PMI hits 16-month high in August
China's factory activity expanded at the fastest pace in more than a year in August with a jump in new orders, official data showed on Sunday, raising hopes that a rapid economic slowdown in the world's second-largest economy may have been arrested.
The purchasing managers' index (PMI) figure, published by the National Bureau of Statistics, rose to 51.0 in August from 50.3 in July, the highest level since last April and ahead of market expectations of 50.6 in a Reuters poll.
leeeta, looks like acquisition of JT purely for licenses therefore the revenue/profit of past JT projects are not consolidated. Got this from HK's FY2013 statement.
" In FY2013, over 99% (FY2012: 100%) of revenue was generated from BOT/TOT wastewater treatment business segment. Less 1% of revenue and profit was contributed by the engineering, procurement and construction (?EPC?) business segment, which the Group entered in June 2013 upon completion of the Tongyong acquisition. "
FY12 annual report was in DVD, probably this year same approach. The quality of earnings for FY13 actually better and more sustainable than FY12 as no write back. Going forward the completion of various expansions and tariff increases will be reflected. I am keeping faith in his puberty kid, hopefully will grow up to be a beautiful and attractive teenageer soon.
leeeta ( Date: 31-Aug-2013 15:29) Posted:
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Yes, that websit usually queried you why you post something or new , the best is to follow the existing posting and don't mention any target price , wait later receive PM or warning by their owner Mr X..., better be " Tiam Tiam" down there and see others posting only.. That is what I observed.
cccx123 ( Date: 01-Sep-2013 13:18) Posted:
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Lucky03 ( Date: 31-Aug-2013 23:36) Posted:
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sjZheng ( Date: 01-Sep-2013 12:37) Posted:
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Lucky03 ( Date: 31-Aug-2013 23:36) Posted:
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Lucky03 ( Date: 31-Aug-2013 23:36) Posted:
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How to guarantee ? Probably the best answer is that I'm putting my own money on Hankore. Everything else is based on the fundamental analysis, technical analysis, price performance of the stock, its financial reports, the macro developments in China, investment by strategic investor such as Alan Wang who increased from 6% to 10%, DBS as the sole agent for the S$300m MTN, those who bought the first series of S$50m notes, watching and monitoring it since Bio-Treat days and feeling reassured by the strategic revamp, new management board, its much stronger cash position now, deriving much stronger cash flow from recurring water treatment fees while it secures new term loans to finance many of its upgrading contracts.
The last 2 developments are especially crucial as Bio-Treat failed because of the mistakes of financing long term projects with short term bonds without an existing source of recurring revenues to provide the cash flow needed to finance the interest due for the short term bonds and triggered off defaults.
cccx123 ( Date: 31-Aug-2013 21:51) Posted:
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New issue highlight
Hankore Environment Tech Group Limited (?Hankore?) this morning announced a
proposed 2-year S$-denominated HY issue, with initial price guidance at the 7.5%
area. The bond has the following structural features: 1) A COC put at 101 should
the Chairman cease to be the largest shareholder of the company 2) An interest
reserve account containing 1 semi-annual interest payment, to be prefunded at least
3 months prior to interest payment date and 3) Financial covenants ? consolidated
tangible net worth of at least RMB1.2bn, consolidated net borrowings to
consolidated tangible net worth of < =1.5:1 and consolidated secured
debt/consolidated total assets < =0.5:1. The expected use of proceeds will be for
general corporate purposes. Currently, the order books are in excess of S$50mn.
New issue view
Despite the improving operating trajectory of the company post-restructuring and a
modest capital structure under a predominantly new management team, we retain
some concerns about residual corporate governance issues, given the haircut taken
by CB investors during the debt restructuring in 2010 and 2011. At the price
guidance of 7.5%, the 73bp premium over the CENCHI?16 (indicated at 109.7
offer/6.77%YTM) does not seem to be sufficient, given: 1) Its past corporate history
2) Lack of strong parentage 3) Weaker covenants relative to CENCHI and 4) The
proposed bond offering is its debut issuance in the SGD HY market post
restructuring.
The key risk to our view is the potential for the bond issue to print, given the high
yield on offer for a relatively short duration paper, a generous PB rebate and the
recent pick-up in SGD high yield new issuance.
Background
Hankore Environment Tech Group Limited (?Hankore?) is an urban environmental resources
recycling solutions provider, with a core focus on wastewater treatment, water recycling, water
supply, sludge treatment, investment in and financing of projects in the water treatment industry,
equipment manufacturing, construction engineering and operation of related projects. With a
portfolio of 10 BOT projects and 1 TOT project, Hankore?s main source of revenue consist of
water tariffs (70.3% of FY2012 revenues), with the remainder from BOT construction services.
The company?s key shareholder is Mr Chen Dawei, David, with a beneficial interest of 17.54%
as of 19th July 2013 through his investment vehicle Giant Delight Holdings. Other major
shareholders include Total Summit Technology Limited (7.95%), Firstree Group Limited
(7.47%). Firstree is a company wholly-owned by Mr Wang Ting, who is the Chairman of China
Mainland De Zhou Investment Fund. Pending the completion of a proposed equity placement,
Mr Wang Yu Hwei is also slated to be a substantial shareholder through his investment vehicle
Asdew Acquisitions Pte Ltd.
Prior to the debt restructuring in December 2009, Hankore was known as Bio-Treat Technology
Limited, incorporated in Bermuda in 2003 and listed on the SGX in 2004. Post-restructuring, the
key executive management of Hankore was Mr Chen Dawei (Executive Chairman) and Mr Nie
Jian Sheng (CEO). Mr Chen Dawei was previously the CEO of China Media Development
Group?s China operations and sat on the board of Beijing Jun Tai Investment Management Co.
Ltd. He is also the founder and CEO of Beijing Revolution Science and Technology Co. Ltd, with
over 8 years of direct experience in the wastewater treatment industry. Mr Nie Jiansheng served
in various senior management positions in Hongkong-based companies such as Tianjin
Development Holdings Ltd, Dynasty Fine Wines Group Ltd and Tsinlien Group.
As of 25th July 2013, Hankore has a market capitalization of S$249mn.
Key credit considerations
▪ Past history of debt restructuring: After defaulting on a put on its S$145.6mn CB in 2008,
Bio-Treat (predecessor company of Hankore) settled on its obligations in December 2010 at
the low 20 cents on the dollar after a c.S$40mn rights issue. In mid-2011, a HK$360mn
shareholder loan previously used to cover part of the CB redemption payment in 2010 was
restructured from the proceeds of another equity issue even though this shareholder loan
was controversial ? despite theoretically being more junior in the capital structure, all the
company assets were pledged as collateral for this facility, granting it de facto seniority over
the defaulted CBs.
▪ Exposure to interest rate and FX risks: Hankore?s debt is 100% based on floating rates,
exposing it to the risk of a steepening yield curve since it does not hedge. Also, it does not
hedge its FX risks (primarily RMB revenues against S$ and HK$ debt) as it relies on natural
hedging from its revenue/cost base.
▪ Potential equity raising is credit positive: On 18th July 2013, Hankore announced that it
has entered into a share placement agreement with Wang Yu Huei, a Singapore
businessman. Under the terms of the agreement, Mr Wang will inject S$14.68mn in net
proceeds into Hankore and be a substantial shareholder in the company with a beneficial
interest of 6.09% of the enlarged issued and paid-up capital of the company. The transaction
is currently pending regulatory review. Should this transaction be successful, the liquidity
position will improve with pro-forma cash of RMB140.8mn (up from c.RMB70mn as of end-
March 2013) while adjusted gross debt/total capitalization will decline by 80bp to 25.6%.
▪ Credit metrics are modest: While Hankore has exhibited reasonably good margins and
moderate leverage metrics as it steadily increases its equity base, on an annualized
9MFY2013 gross debt/EBITDA basis, it is still elevated at 5.8x. Interest coverage ratios
seemed adequate with EBITDA/gross interest and FFO/gross interest of 2.2x and 2.4x
respectively. While 9MFY2013 FCF is positive, this was mainly driven by a material reduction
in capex rather than an increase in CFO (estimated to be flat to FY2012 levels). With still
significant working capital demands for construction work and prepayments for Hankore?s
expansion and upgrading works, we do not expect CFO to improve materially in the near-
term.
▪ Near-term debt reduction is unlikely: End-March 2013 cash balance of RMB69.7mn is
insufficient to repay RMB151.9mn of short-term debt due within the year and even after
accounting for the net proceeds raised from the proposed equity issue, is still slightly less
than 1x coverage of short-term debt, necessitating refinancing. For Hankore to achieve
escape velocity for its restructured operations, we believe that further equity infusions are
necessary, if not more debt. Hence, deleveraging is unlikely.
Bond structure
Despite the inclusion of the interest reserve account (1 semi-annual interest payment and the
need for prefunding 3 months prior to interest payment date) and the financial covenants, the
formulation of the indenture is still materially weaker than what is normal for a typical HY issuer.
There are no covenants for key areas such as limitations on indebtedness, restricted payments,
mergers and affiliate transactions.
As a matter of practicality, potential enforcement of bondholder rights is difficult since the issuer
is domiciled in Bermuda despite being listed on the SGX. Furthermore, the issuer does not have
material operations of its own but is dependent on dividend upstreaming from onshore PRC
Opcos to service its debt, none of which guarantee the proposed bond.
▪ Structural subordination risk: Hankore is a company domiciled in Bermuda and listed on
the SGX. As an investment holding company, it does not have material operations and
controls its key operating companies (?Opcos?) in the PRC through various offshore holding
companies (?Holdcos?). As the PRC Opcos do not guarantee the obligations under the
proposed bond, bondholders are subject to subordination risk arising from the incurrence of
onshore senior debt at the Opcos? level.
▪ Change of control (?COC?) covenant is weak: The COC covenant is weak as it does not
contain a ?sale of all/substantially all assets? trigger which is typically enshrined in a HY bond
indenture. We consider this a significant risk as Hankore is reported to be in discussions with
potential interested parties in acquiring a portion or all of its water treatment assets. To the
extent that these sales go through, bondholders are not protected as the cashflows from the
water treatment assets may no longer support debt service on the bond and yet, they are not
able to put the proposed bond back to Hankore. Furthermore, a merger with another public
company with a dispersed shareholder base will also not trigger the put, which is a
weakness.
▪ Inclusion of financial covenants is a strength: While not unusual for SGD HY issues, the
inclusion of financial covenants is a strength for bondholders. The formulation of these
covenants is slightly different from what is typically seen for USD issues which is based on a
fixed charge coverage ratio (i.e. an EBITDA/interest metric).
▪ Limitation on asset sales covenant is weak: While this covenant is in the indenture, the
scope of this is fairly limited and unlike the typical regime for HY issuers since any asset
sales is allowed as long as it is incurred in the ordinary course of business.
▪ Dividend covenant: This covenant prohibits Hankore from making any dividend payment,
capital reduction or other shareholder distributions as long as principal and/or interest
payments are outstanding or if there is a breach of covenants under the indenture. Since
dividends have been nil over the past few years, we see limited utility in this covenant.
▪ No optional redemption prior to maturity other than upon the occurrence of specified
events: The bonds are not payable prior to maturity other than for tax reasons, in the event
of a listing or if there has been an asset disposal to a trust which is not more than 50%-
controlled by Hankore.
Lucky03 ( Date: 31-Aug-2013 21:24) Posted:
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[WASHINGTON] US consumer spending barely rose and inflation was tame in July, offering a cautionary note on the economy as the Federal Reserve weighs cutting back its massive bond-buying program.
Spending, which accounts for more than two-thirds of US economic activity, could struggle to regain momentum as other data on Friday showed consumer sentiment fell this month.
The reports added to a number of signs that have suggested a loss of steam in the economy early in the third quarter after a fairly sturdy performance in the April-June period even in the face of higher taxes and lower government spending.
"There has been a lot of optimism about the economy accelerating in the second half of the year as the fiscal drag waned. The latest data suggests that's not happening," said Michelle Girard, chief economist at RBS in Stamford, Connecticut.
(Incorporated in Bermuda) (Company Registration No. 34074)
PRICING OF S$50,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF 7.50 PER CENT. PER ANNUM FIXED RATE NOTES DUE 1 AUGUST 2015, TO BE ISSUED PURSUANT TO THE S$300,000,000 MULTICURRENCY MEDIUM TERM NOTE PROGRAMME
Hankore Environment Tech Group Limited (the "Company") intends to issue the first series of notes comprising S$50,000,000 in aggregate principal amount of 7.50 per cent. per annum fixed rate notes due 1 August 2015 (the "Series 001 Notes") pursuant to its S$300,000,000 Multicurrency Medium Term Note Programme established on 23 July 2013 (the "Programme"). The Company wishes to announce that it has priced the offering of the Series 001 Notes (the "Offering"). DBS Bank Ltd has been appointed as sole arranger and dealer of the Offering.
The principal terms of the Series 001 Notes are as follows: Issue Size: S$50,000,000
Issue Price: 100 per cent. of the principal amount Interest: 7.50 per cent. per annum
Maturity Date: 1 August 2015
Change of Control Put:
Under the terms and conditions of the Notes, if, for any reason, Mr Chen Dawai, David ceases to be the single largest shareholder of the Company, the Company shall, at the option of the holder of any Series 001 Note, redeem such Series 001 Note at 101 per cent. of its principal amount together with interest accrued to the date fixed for redemption. Mr Chen Dawei, David has a deemed interest of 17.54 per cent. in the Company through Giant Delight Holdings Limited which is wholly-owned by him.
Mandatory Redemption:
Under the terms and conditions of the Series 001 Notes, the Company shall, upon the occurrence of a Mandatory Redemption Event (as defined below) redeem all (but not some only) of the Series 001 Notes on the Interest Payment Date immediately following the occurrence of such Mandatory Redemption Event (other than an Interest Payment Date which falls on the Maturity Date and provided always that (i) if the date on which such Mandatory Redemption Event occurs falls on an Interest Payment Date, on such Interest Payment Date and (ii) no Mandatory Redemption Event shall occur on or before the second interest payment date in respect of the Series 001 Notes) at 101 per cent. of the principal amount of the Notes together with interest accrued to the date fixed for redemption.
A ?Mandatory Redemption Event? occurs when, following a disposal of assets for the purpose of the establishment by the Company or any of its subsidiaries of a trust or fund or for the purpose of listing the securities of an entity or vehicle where the Issuer or any of its subsidiaries is a sponsor, in each case, as referred to in Condition 3(c)(ii)(3) of the Series 001 Notes, the Issuer does not hold or ceases to hold more than 50 per cent. of the interests in such trust, fund, entity or vehicle.
The issue date of the Series 001 Notes is currently expected to be on or around 1 August 2013 and the Series 001 Notes are expected to be listed on or about 2 August 2013.
The Series 001 Notes and the coupons relating thereto will constitute direct, unconditional and unsubordinated obligations of the Company and shall at all times rank pari passu, without any preference or priority among themselves, and at least pari passu with all other present and future unsecured obligations (other than subordinated obligations and priorities created by law) of the Company of the Series 001 Notes will be secured by a charge and assignment of the Company?s rights, title and interest in and to an interest reserve account opened and maintained in respect of the Series 001 Notes.
The Company intends to use the net proceeds from the Offering (after deducting issue expenses) for general corporate purposes, including financing investments and general working capital of the Company or its subsidiaries.
Application has been made to the Singapore Exchange Securities Trading Limited (the "SGX-ST") for the listing and quotation of the Series 001 Notes on the Official List of the SGX-ST. Admission to the Official List of the SGX-ST and quotation of the Series 001 Notes on the SGX-ST is not to be taken as an indication of the merits of the Company, its subsidiaries, its associated and joint venture companies, the Programme or the Series 001 Notes.
BY ORDER OF THE BOARD
Chen Dawei, David Executive Chairman 26 July 2013
cccx123 ( Date: 31-Aug-2013 19:51) Posted:
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leeeta ( Date: 31-Aug-2013 20:40) Posted:
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