Time & date: 10 am, 31 Oct 2014.Venue: RELC International Hotel, Orange Grove Road.
CFO Felix Yau. NextInsight file photo.HANKORE ENVIRONMENT's chief financial officer, Felix Yau, started off the meeting with a Powerpoint presentation of the company's various projects and water treatment plants located in China.
He said HanKore had negotiated with local municipal governments for increases in water tariffs during the year for a number of projects.
That led a shareholder to ask: How is an increase in water tariffs decided upon? And for the Nanjing Golden Idea plant, why was the tariff raised by a sharp 66.4%, from 88 RMB cents per tonne to 147.5 RMB cents?
Management's reply: Tariffs are revised according to agreed formulas which are pegged to various indices. The formulas are revised every 2-4 years.
In addition, the government considers the capex, if any, incurred to improve the waste water plant. The capex for the Nanjing Golden Idea plant enabled HanKore to justify its request for a higher tariff.
Shareholder @ AGM. NextInsight photo.Next: A shareholder asked for clarity on the progress of HanKore's reverse takeover (RTO) of China Everbright's water assets.Management said subsequent to the signing of the sale and purchase agreement with China Everbright in June 2014, HanKore had been drafting a circular to send to its shareholders and had been in discussion with the Singapore Exchange about the draft.
"It's a complicated document as a lot of legal and financial information is required," said the CFO.
After the circular is approved by SGX, a Special General Meeting will be convened to seek shareholder approval for the RTO.
Hopefully, the meeting can be held next month (Dec). Shortly after shareholder approval is obtained, HanKore will issue new shares to China Everbright.
Share price volatility
A shareholder said that HanKore's share price had fallen by about half from its peak in March 2014 to less than 80 cents recently as the purchase price of the China Everbright assets is viewed by analysts as being on the high side.
After the AGM: HanKore lead independent director Paul Lim (with tie) chats with attendees. NextInsight photo.Lead independent director Paul Lim sought to explain that the share price movement had to do with multiple factors. For example, there was excitement generated by news at end-Dec 2013 of the proposed RTO, and, of late, weakness in the broader market. Consider that the share price was trading at 60+ cents before end-December 2013.
Subsequently, it moved sharply up to above $1.40 before June, and weakened after the announcement of the $1.2 billion price tag for the Everbright assets.
A shareholder urged the company to pay dividends in future.
With dividends and China Everbright as its major shareholder, HanKore would be a sought after blue chip in future, he said.
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HanKore's Powerpoint materials can be found on the SGX website.