Is China Waste Corporation Ltd headed for oblivion?

With no business and hardly any cash left in the bank, China Waste Corporation Ltd (ASX:CWC) appears to be headed for the bin

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published February 10, 2016 6:14 pm AEDT

China Waste Corporation Ltd (ASX: CWC) appears headed for voluntary administration, unless the company can urgently raise capital.

The company received a polite enquiry from the ASX recently, given the company had spent $616,000 in the last quarter, and had just $262,000 in the bank. Quite rightly, the ASX wonders whether the company can continue as a going concern. It doesn't help that the company failed to generate even one dollar of revenue in the quarter (or the previous quarter, or since it listed for that matter).

China Waste listed on the ASX in June 2015 via a back-door listing through a resources exploration company Central West Gold Limited. The company owns Harvest Champion and its subsidiary Hong Kong-incorporated China Urban Mining Holdings Limited.

In the prospectus, China Waste said it expected its businesses to bring 'together the procurement, development and exploitation of green technologies, process and products including in the area of waste disposal and treatment and recycling of waste products'. A nice sentiment no doubt.

But how investors were convinced to invest in this company is beyond me. The company has virtually no assets and no revenue generating business, nor any business for that matter that looks like generating any revenue.

And yet, China Waste's share price has risen 77% in the past 12 months to 49.5 cents, giving the company a market cap of $44.4 million.

The company says it is confident it can raise equity or debt funding, but I certainly wouldn't be willing to invest my hard earned in this company.

Foolish takeaway

In my opinion, there's a very real risk China Waste's shares could end up being next to worthless. Buyer beware.

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