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From Singapore Auditor to China CFO

by Cesar Bacani, 12 October 2010

topics:
Management Professional Development

tags:
anti-pollution technology Baker Tilly CENV Chiar Choon Teck China Environment Ltd. climate change

Chiar Choon Teck used to be an audit manager at Baker Tilly in Singapore, where he supervised a portfolio of audit engagements that included private companies in the process of getting listed. Before that, he was an external auditor with Ernst & Young and Moore Stephens. Then in June this year, he became chief financial officer of China Environment Ltd. (CENV), a provider of air pollution control and treatment solutions in mainland China.

The 34-year-old accountant’s ascent to a top financial post is yet another entry in Asia’s lengthening list of rocket-fuelled careers. As China, India, Indonesia, Vietnam and other emerging economies resume gangbusters growth, demand for finance talent is once again outstripping supply. Especially in China, private enterprises are finding good pickings in the audit firms that they engage.

For Chiar, the transition from auditor to corporate executive has been seamless because he has a professional relationship with CENV. “I’ve known them since 2007,” he says. That was the year the Chinese company listed on the Singapore stock exchange via a reverse takeover (RTO) of Gates Electronics, a dormant listed company controlled by a CENV strategic investor. Chiar was the Baker Tilly audit manager that helped the company prepare for the RTO, then became the listed firm’s external auditor.

Sexy Industry

It was not difficult for Chiar to make the decision to jump from auditor to auditee. “It’s a sexy industry,” he says of CENV’s business. The company manufactures and installs electrostatic precipitators (ESPs) in China’s power generation plants, cement factories, chemical facilities, iron and steel mills, paper mills and mining operations, which are required by law to filter out ash and other particles measuring 50 milligrams from every cubic metre of smoke they emit.

And there are massive amounts of these emissions. China is already the world’s top emitter of carbon dioxide, accounting for around 21% of the world’s greenhouse gas emissions. The country has been accused of being a stumbling block in crafting a global agreement to combat climate change in Copenhagen late last year. The latest talks that China hosted in Tianjin this month does not seem to be making much headway either.

But on its own, China has been aggressively trying to cleanse and protect the environment. “In August, the Chinese government has already shut down more than 2,000 factories,” says Chiar. “Premier Wen Jiabao has said he wants to cut China’s carbon dioxide emissions per unit of economic output by 40% to 45% from 2005 levels.” Under its current five-year plan, China has allocated 1.4 trillion renminbi, equal to 2% of GDP, on environmental protection.

Companies like CENV are among the beneficiaries. The government’s carrot-and-stick approach involves penalties and outright closures, and tax perks and other incentives for compliance. An environmental services provider like CENV can also be categorised as a high-technology company, which enjoys tax breaks. The company’s application has been approved, which means it is now taxed at 15%, down from the 25% rate of other corporates in China.

Investor Relations

It’s too early to say whether CENV can ride the green wave all the way through. But Chiar is positive. Revenues last year topped RMB499 million (US$75 million), up 7.6% from 2008, although net profit fell 35% to RMB53.8 million because of goodwill write-off related to the RTO to the tune of RMB29.3 million. Without the write-off, net profit was actually up 26%. Net profit in the first half of 2010 reached RMB55.8 million, up 26% from the same period in 2009.

He has had to explain these results to shareholders, analysts and the media. “That’s the new one for me, investor relations,” says Chiar. Earlier this year, before he became CFO, the market was hit by rumours that the controlling shareholder was selling out and that there were financial irregularities. CENV’s stock price fell, despite the company’s denials. The share price had soared to the S$0.70-level from the RTO price of S$0.29, up 141%. The stock closed at S$0.26 on October 8.

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