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Public company info - Greens Holdings Ltd. , 01318.HK
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Greens Holdings Ltd., 01318.HK - Company Profile
Chairman Tang Yau Sing
Share Issued (share) 1,245,000,000
Par Currency U.S. Dollar
Par Value 0.01
Industry Electric Equipment
Corporate Profile Business Summary: The Group is principally engaged in production and sale of heat transfer products, wind turbine towers, mining and trading of alluvial gold and the services of waste heat power generation. Performance for the year: Revenue for 2014 was approximately RMB251.6 million, representing a decrease of approximately 32.8%as compared with last year due to challenging trading conditions during the year 2014. Loss attributable to owners of the Company for 2014 was approximately RMB276.1 million, representinga significant increase of approximately 36.0% as compared with last year. BUSINESS REVIEW: International business platform The Group’s fully integrated international business platform continues to widen the customer base of theGroup, and as a Grouping, separate from the China business achieved a break even performance for 2014.This has been achieved through a three pronged approach to the market. Firstly, a focus on after sales reengineeringof the extensive installed base of the Greens Group, established from over 100-years of productsupply. This offering has been driven firstly by service and spare part support, coupled with design expertiseto enhance product performance, matching this to changing fuel mixes (gas, oil, coal, biomass), secondly bytargeting a turnkey approach to Greens traditional supply, encompassing the peripheral equipment, to offermore of a package solution to customers – as a “one stop shop”, which generates a larger scope and value percontract, and thirdly, by higher visibility of Green’s existing product portfolio to a wider customer base. Success in our overseas operations is demonstrable proof that the strategy is gaining momentum; a firmplatform for future market penetration achieved. The major theme in all these achievements are environmentally friendly solutions for increasing efficiencyand production – using Greens established reputation as a provider of engineered products, where we havenow established delivery of contracts proving Greens capability to deliver these solutions into overseasmarkets. Economisers Since economiser, the historical and traditional product of the Group, is a product that enhances efficiencyof coal-fired power stations and industrial power plants and reducing emissions thereof, the Group’sSteel-H extended surface solution has been well known for its durability and effectiveness. The marketfor economisers has become very competitive during the year. Especially in China, where customers foreconomizers are mainly main contractors of coal-fired power plants construction projects, the number andscale of project bidding in the market has substantially decreased. Price competition, on the other hand, hasalmost become the dominant factor in the market at the expense of quality products and services. Small scaleproducers of economisers have become more aggressive and distorted the healthy order in the China market. The Group’s sales of economisers in the year decreased by 32.8% to approximately RMB80.5 million (2013:approximately RMB119.9 million) as compared with last year. Upgrading of coal-fired power plants in Chinahas brought about strong rebound in market demand of economisers, however, part of GREENS’s marketshare with major customers has gone to low cost supply that may not be as technically advanced as theGroup’s European design products. During the year, as emission reduction government legislation has beenadvanced to lower temperature facilities, GREENS’s new series of economizers with the capability to workunder lower temperature environment have established a firm market foundation. Waste heat recovery products and boiler components Waste heat recovery products cover a number of applications such as HRSGs, systems applied in gas-firedand oil-fired power plants, waste heat boilers and other waste heat recovery products which are primarilyused in clean fuel and Waste-to-Energy power industry projects. Waste heat boilers are also used in industrialapplications such as cement plants, coking plants and oil refineries to recover waste heat from dailyoperations and to reduce emissions. During the year, a majority of these products were supplied to customersin China, Europe and USA. Turnover of waste heat recovery products recorded a decrease by 29.7% ascompared with 2013 to approximately RMB99.7million for the year (2013: approximately RMB142.0million). In order to extend the markets of the Group’s waste heat boilers and boilers related products underthe prevailing sluggish market environment worldwide, the Group has managed to attain new orders fromnew markets such as USA, Middle East and other southern Asian countries and for new applications of theGroup’s products. Marine products Marine products are generally waste heat boilers, economisers, composite boilers, and fired boilers forshipping applications. Many of the Group’s customers in China and Singapore for marine products areshipyards located in mainland China. During the year, sales of Marine products decreased by 18.8% toapproximately RMB38.4 million (2013: approximately RMB47.3 million). Waste heat power generation Baicheng Greens, a wholly owned subsidiary of the Company was being forced to discontinue its electricitygeneration. Waste heat supplied and produced by Xinjiang Coke from their coking plant had been stopped asthe coking plant ceased operations in November 2013. The original project structure was based on the buildoperate-transfer (”BOT”) model and the contract period was from May 2008 to July 2015 whereas BaichengGreens is entitled to the revenue from selling the electricity so generated to the power grid in China. Owing to the unfavourable factors disclosed in the annual reports of the past few years, the electricity salesof Baicheng Greens has been affected by the domestic government’s regional administrative policies withrespect to the consolidation of coal resources and the operational volume of coal mines. Full impairmentprovision was provided for the project as at 31 December 2012. The Group’s second waste heat power generation project in Kunming city, Yunnan province, China (the“Yunnan Project”) was related to a cooperative agreement between Greens Kunming and Malong Chemical.The Yunnan Project comprises the technological upgrade of the waste heat power generation system of achemical factory in consideration of the electricity and steam sales revenue for six years. The waste heatpower generation facilities of the Yunnan Project were operational during late 2011. The operation rightsof the Yunnan Project have been recorded as a financial asset and an intangible asset in the consolidatedfinancial statements of the Group for the year. Part of the accompanying guaranteed revenue to be paid by thechemical factory to the Group has been recorded as a financial asset for the year. Except for the guaranteedrevenue mentioned above, the Yunnan Project is recorded on a similar basis to that of the Group’s existingBaicheng project. No revenue has been generated from the Yunnan Project during the year (2013: Nil). Thechemical factory failed to provide any waste heat to the Group’s power generation facilities installed into thechemical factory’s premises and at the same time refused to pay to the Group the related monthly minimumpayment specified by the contract. The Group has managed to take appropriate actions to safeguard its rightsunder such disputes. Full impairment provision was provided for the project in 2012. Wind turbine towers Subject to the contractionary policy towards wind power of the central government in China, the Grouphad suffered from significant reduction in demand for its products. Wind farms and developers for windpower and related investments are being more difficult in raising capital for new wind power projects. Asa result, the overall market and demand for wind turbine towers produced by Tongliao Greens had droppedsignificantly. Given such unfavourable change in the wind turbine tower market, the Group had adopted amore conservative approach in accepting new orders after completing more than 150 sets of wind turbinetowers from 2010 to 2011. No revenue was recorded in 2014 for additional billing on projects completed inprevious years (2013: RMB2.1 million). Service and repairs These include boiler conversions, upgrades, general maintenance services on marine or land boilers,installations, testing and repairs. The Group’s service and repair business has capitalised on its significantexperience and expertise in heat transfer engineering. Revenue from services and repairs shows a decreaseof approximately 10.5% as compared to last year, reaching to RMB22.2 million (2013: approximatelyRMB24.8 million). Alluvial-gold mining Following two successful biddings during mid 2012, Kezhou Greens Mining Co. Ltd. (“Kezhou Greens”) asubsidiary of the Group with 51% equity interest in XinJiang had acquired five mining rights on several plotsof land in Aketao county, Kirzlesu Kerkirz city, Xinjiang Uygur Autonomous Region with possible alluvialgold deposit. All five mining rights had an operating term of two years after attaining all the necessaryenvironmental approval from local government. Kezhou Greens has then invested in the basic infrastructureof the mine sites and has recruited a team of mining staff in the local area. After spending prolonged periodin constructing the mining facilities on site, operations started in year 2013. However, Kezhou Greensrecorded unsatisfactory results and was suffering from losses in 2013 and 2014 owing to unfavourablereasons including the drop in market price of gold in China, inefficiency in operations and unstable level ofwater supply. Prospects: The business landscape has changed significantly over the last 5 years, as stated in last year report, “most ofIndustrial output has moved to Asia and mid-Asia and with ever increasing growth in population. Countriesin these regions, including China and India, are suffering from severe air pollution, ”Smog”, that has nowreached levels where pressures are placed on the respective governments to take action to protect public atlarge.” Now added to this scenario is the politically instability happened in the Middle East, Russia and Ukraine,precipitating an abrupt change of the oil price from over US$100 per barrel to now less than US$60. The Chinese economy is beginning to plateau, with the penetration of our key products made already in thecoal/power station markets. Focus is now moving to newer, cleaner fuels and products. India, on the other hand, with a new Government is on the verge of expansion; and the need for Greenstraditional products and core technologies is expected to dramatically increase during 2015. As the newGovernment expansion policies take hold, and the Power gap presently being experienced is started tonarrow, therefore further economic growth is anticipated. Economies in Europe are starting to come out of recession, but the speed and longevity of the recovery issomewhat uncertain. USA, China and South East Asia remain relatively buoyant markets, due to extensive available resources,steady population growth and growing demands for an improvement of living standards. Globally, there nonetheless remains increasing intensity to improve thermal efficiency and reduce emissionsin order to meet promised targets of various governments. In most of the Group’s established markets, thereis an acceleration of commitment to reduce dependency on fossil fuels with clean energy projects beinginstalled. Projects involving modification to existing power plant and others being larger scale waste toenergy and biomass plants are now the priority. Nuclear, wind and solar power projects that rely on much stronger commitments from governments arestarting to gain traction with green light being granted by governments. These do contribute partly to fillingthe ‘demand gap’. New opportunities, whereby GREENS is very well positioned here and has been securing a number of theseopportunities through its overseas platform, are being created where skills and track record are requiredalongside with clean energy emphasis. The continued development of Greens Combustion within the Petro-chemical, Process and refining marketsrepresents a significant development for Greens future growth. Opportunities for business expansion ofthis area are being explored both overseas and domestic China, bringing technology collaboration betweenGreens and well-known partners on a worldwide basis. The development of shale gas in particular is reducing the cost of energy that has changed the face ofindustry with significant reducing dependence on the Middle East. Advancements in technology andeconomic pressures have now resulted in significant progress in the extraction of fuels from difficultlocations and also make the burning of domestic waste and lower calorific value fuels with less Sulphurcontent commercially viable. This is already presenting opportunities for the supply of conventional powergenerating equipment. The ever increasing volumes of domestic refuse and the restrictions on land fill siteshas required many local authorities in developed countries to invest in transforming waste to energy projects.Coal plants are being converted to biomass and this requires skills and experience that Greens provides.Contracts have now been secured and delivered on schedule by our business units. Short term solutions such as diesel engine power projects are being installed in more remote areas whereaccess to prime fuels is restricted particularly in developing countries such as Bangladesh and also in MiddleEast. Typically such projects involve a number of the Group’s exhaust gas economisers and boilers. TheGroup has successfully captured contracts in this area. The project value is often five to ten times of some ofthe Groups standard economizer contracts. Somehow Greens are increasingly becoming an Engineering andProcurement Contractor (EPC). China and Mid Asia Basic national targets for China and mid Asia, including India, are still unchanged. According to the recentpolicies of Chinese government, environmental protection industries will receive funding from the Chinesegovernment in an effort to stimulate technological innovation. The funding will cover a wide range oftechnologies that address air, water and soil pollution including energy saving products, waste disposal,electric vehicles and pollution monitoring. The Group’s competitive advantage consists of its internationalreputation and its well-established exposure to the market in China where success has already been attainedthrough efficiency improvements by addition of its low temperature economizers on several coal fired powerstations. There is much more potential for the Group to participate the “Coming In” target plans as stipulatedin the View including an active role with state owned corporations, utilities and petro chemical companiesin the development of and upgrading of existing steam generating and process plant, waste heat boilersand waste to energy plants, which are related to energy efficiency solutions, high efficiency combustion,optimization of heat transfer performance, reduction in emissions and disposal of wastes. During early 2014, major cities in China such as Beijing and Shanghai have announced their respective plansto pursue the Action Plan. The ten measures of the Action Plan has already been made public including therectification of small coal-fired boilers and upgrade the facilities of coal-fired steel mills, cement plants andpower plants. Meanwhile, markets like India, Bangladesh and Pakistan and some African countries are very active becauseof their targets to respond to power demands and development of the infrastructure. It is the parliamentelection year in India, the possible change in government in India is expected to enable many suspendedprojects to be sanctioned to proceed and investment funds allocated made available. Whilst prospects in Indiahave started to build up again, Bangladesh and parts of the Middle East are already showing great potential.The Group has already supplied equipment and developed relationships with active main contractors there.Whilst most boiler companies have suffered from delays to projects in India the twelfth five years plan ofIndia with a target of constructing approximately 100GW of thermal power capacity from 2012 to 2017 asreported by the local media. The preferred solutions, and environmental friendly, are gas fired co-generationprojects. India has already invested in a national grid pipeline and several LNG terminals that constitutepart of the long term plan to reduce dependence on coal. However, the final prices of gas and electricity arekey factors affecting the decision of independent power developers that has affected the rate of progress andat the moment such investment is stalled until such time as government takes action through incentives orsubsidies. A number of private developers placed their plans on hold for construction and these projects canbe fast tracked for completion if a new government in India addresses the problem as part of the solutionto improve the environment. In the meantime the country continues to use coal fired power stations leadingto the environmental problems of India to meet legislation needs upgrading and conversion. New projectsin developing markets like India and Bangladesh are at higher risk because it relies on funding or overseasinvestment. Based on the experience of the last few years suppliers are more careful to request secure termsand guaranteed letters of credits as prerequisite to invest any projects. Given the above, the slow-down of major markets in the last few years like China and India, has hadan adverse impact on the Global power generating industry. But, as a result of increased environmentalpressures, China has already picked up and is expected to follow by India; both markets then acceleratingin the short and medium term. A number of orders for gas and coal-fired power plant retrofitting have beenattained by the Group and it is now targeting the size and frequency of orders from major customers in Chinain the remaining part of the year. The availability of shale gas in China will also have a significant impact. In the past three years, the Group has established solid track record in China of its capabilities to design andmanufacture of power facilities fueled by renewable energy, namely, waste-to-energy and biomass fuel. Neworders have been placed by the Group’s strategic business partner who is the leading biomass power plantsubcontractor around the world. More extensive cooperation between us is expected to materialize shortly.More attention about the environmental contribution of waste-to-energy and biomass power generation hasbeen drawn among South Asian countries. The Group, leveraged on its international would actively focus onthese new potential markets. The management has decided to strengthen the production capability in Inner Mongolia to includepressurized vessels and boilers components. Application for the necessary technical licenses andaccreditation from the Chinese government has been attained and the Company expects to secure orders forother types of clean energy projects in that region. Being part of the sustainable development directives ofthe Group, the management has been carefully looking for other alternative opportunities to revitalize theGroup’s investment in Inner Mongolia. Other International Markets Certain sales opportunities were delayed in 2014, as China plateaued while the recovery in America,Europe and India took longer than expected. However, in 2015 there are already signs of turnaround and themomentum of improvement in various segments, including but not limited to, the more active heat transferproducts market in South Asia and the Middle East and the solid infrastructure upgrading plans in the USAmarket. The Singapore office has successfully completed major FPSO projects now targets for more orders fromFPSO markets in South Asia, and promoted the Group’s experience to Chinese shipyards who are focusingon larger marine and offshore projects. The original development plans for Brazil remains on hold whilst our major competitors have alreadyestablished a foothold. The USA subsidiary has delivered some sizable jobs and is expected to continue the success. Based onpositive response in North America, the Group will further enhance the sales and technical skills withpriority to support USA customers. Much focus has been placed on supporting key customers in USA. Weare confident of securing orders from major co-generation plant in 2015 as gas prices have tumbled. Besides,the onset of shale gas production and power plants fueled by new fuel supply is expected to produce moreopportunities for the power industry. For the European markets, our UK subsidiary has resumed profitability in 2014. They will strengthen thecustomer follow up and aim at tendering larger turnkey projects in developing countries. Internationally, over RMB300 million has been in one project which involves traditional oil and gas firedboilers to be installed onto a sizable oil refinery in the Middle East. This project demonstrates the strengthwhere GREENS is competent. Singapore, India and the UK are committed to focus on waste to energy retrofit and biomass in 2015. Greens Combustion, with their team in South England will focus on their core skills in the internationalpetro-chemical, process and refining markets worldwide including China. The combustion, an upstream expansion of the Groups, is expected to have synergistic effect to the furtherdevelopment of the Group and will provide opportunities to the other core segments.

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