Written by Sergeo Domtchenko
To say that the financial sector is going through a “rough patch” is an understatement. Profit plunges, dividend cuts, frozen loan repayments, and suspended executive pay increases have been the fallout of the COVID-19 pandemic.
Since the market highs recorded on February 20, the S&P 500 Financial Index fell by over 22.6%. However, amidst the struggling financial sector, Greenpro Capital Corp (NASDAQ: GRNQ) continues to captivate the investing community with impressive growth.
Article Outline: 1. Who is Greenpro Capital? 2. Why did the company make headlines this week? 3. Greenpro's financials. 4. Is it worth the investment?
Who is Greenpro Capital (NASDAQ: GRNQ)?
Greenpro Capital Corp is a financial & corporate services company that was born in 2013. While the Company is headquartered in Hong Kong, its shares are traded on the NASDAQ. Greencorp primarily serves Small to Medium Enterprises (SMEs) based in Hong Kong, China, and Malaysia. Some areas that the company notably specialises in include:
- Cross-Border Advisory
- Tax Planning
- Acquisition & Rental of Real Estate
- Bank Product Analysis
- Wealth Management
- Asset Protection
- Insurance Brokerage.
Why did the Company make Headlines This Week?
Investors rallied behind Greenpro after the company announced it acquired a 4.4% stake of the Millenium Sapphire for U.S. $4 million. For those who aren’t aware, the Millenium Sapphire is a gemstone sculpture that was sculpted by Italian artist Alessio Boschi. The blue gemstone is the biggest sapphire sculpture in the world, weighing in at a whopping 61,500 carats (a unit of measurement for precious stones).
Since its reveal in 1995, it has changed hands between only a handful of investors. The company plans to capitalise on the commercial potential from the Millenium Sapphire. This was reiterated by CEO, CK Lee, “We will develop the business and cash flows through branding and licensing along with royalties and ticket sales through major museums worldwide.”
Hence, it should come as no surprise why Greenpro’s share price rose by over 69% on Wednesday.
Greenpro Capital’s Financials
In 2019, Greenpro posted a 6.5% increase in revenue to U.S. $4.4 million. This was accompanied by an 18.7% increase in the company’s gross profit ratio to 69.3%. Also, Greenpro posted as a cash flow to assets analysis result of 0.5. When compared to the generally accepted standard of 0.3, Greenpro has a very efficient asset structure.
Despite the very pleasing financials, we must address the negatives at Greenpro. At YIG, we believe that every investor deserves a balanced perspective.
Greenpro posted a 39.1% decrease in its current ratio to 46.4%. When combined with the 56% increase in its D/E ratio, it may become difficult for the company to meet its current financial obligations.
More concerningly, Greenpro posted a net profit ratio of -30%. This can be attributed to the company’s gargantuan expense ratio of 104.2%. All of this combined meant that Greenpro recorded a ROI ratio of -42.5%.
Is Greenpro Worth the Investment?
Before I start, I am obliged to remind our viewers that this is not advice, only general commentary from my extensive research in this area.
Short answer: Not for the time being but possibly in the future (opinion not advice).
While there is a massive commercial potential for Greenpro associated with the Millenium Sapphire, an investment holds immense risk. None more so than the company failing to meet its financial obligations with a meagre current ratio.
Also, earlier this week, Mike Pompeo announced that Hong Kong isn’t a sovereign state to China. This means that there is a likelihood that Greenpro Capital may need to restructure itself so that it complies with Chinese commercial law. Moreover, the U.S. Senate passed a bill that allows the SEC to delist any Chinese company that fails to adhere to U.S. accounting standards. With so many unknowns surrounding the U.S. – China political tensions, I would hold off from investing in Greencorp Capital (opinion not advice).
If you enjoy our articles or want to learn more, you can subscribe to us for free via email and get updates when we post new articles. From all of us at YIG, thank you for the support.
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Here is our free, uncomplicated, and extensive ASX portfolio
Here is our free, uncomplicated, and comprehensive breakdown of smart COVID-19 Strategies
Written by Sergeo Domtchenko, Associate of YIG.