Tired of construction and recycling, Envision Greenwise tries AI infrastructure

Following its earlier transition from construction to environmental work, this ‘chameleon company’ has now set its eye on becoming an AI wunderkind

Key Takeaways:

• Envision Greenwise has spent nearly 1.7 billion yuan on servers as it makes a new move into AI infrastructure
• The company, traditionally engaged in construction services and recycling, aims to boost its computing power capacity to 16 MW in the short term

By Lau Chi Hang

A recent announcement of plans to invest 380 million yuan ($57 million) for over 100 servers may have left people less familiar with Envision Greenwise Holdings Ltd. (1783.HK) scratching their heads. The company, whose main business until recently was in battery recycling, said the investment was aimed at bolstering its cloud and intelligent computing service capabilities.

Many might not be very familiar with Envision Greenwise. But knowing that high-flying large AI model developer MiniMax is among its investors may help to explain the new purchase.

The old adage that “change is the only constant” quite fittingly describes Envision Greenwise these days. The company was historically engaged in traditional building construction, and only ventured into the recycling business a little over three years ago. But that apparently wasn’t enough, and this year it abruptly pushed into the red-hot AI sector, sensing a new opportunity.

Two cousins

The company’s story began with two Hong Kong entrepreneurs, Chan Kam Tong and his cousin Chan Kam Ming. In 1985, the pair acquired Head Fame, a building contractor, with dreams of taking on superstructure construction projects. After three decades of hard work, they successfully took their company, renamed Golden Ponder, public in 2018.

But the construction industry is hardly a capital market darling these days. Devoid of any glamorous narrative and plagued by chronically low valuations, Golden Ponder also faced its own major operational struggles as a result of the pandemic and a slumping Hong Kong property market. In 2022, it brought in Kwok Chun Sing, a graduate of Fujian Agricultural University with over two decades of experience in environmental technology and new energy. Kwok founded the Hong Kong Recycling Chamber of Commerce in 2015 and has served as a director at the applied technology research arm of China Resources Environmental Protection since 2021.

Shortly after coming aboard, Kwok launched a reverse takeover of the Chan brothers’ equity interests to become the company’s controlling shareholder. He then immediately set out to transform the company into a green energy and circular economy platform. Anticipating a coming boom for new energy vehicles (NEVs) at the time, he zeroed in on the battery sector, branching out into battery recycling, battery energy storage systems, and electric vehicle (EV) charging facilities.

Kwok’s most striking asset was his extensive network, which allowed his company to form a steady string of tie-ups with top-tier enterprises. As recently as earlier this year, the company announced a collaboration with lithium behemoth Tianqi Lithium to jointly develop lithium-ion battery recycling technologies.

His efforts weren’t wasted. Fueled by revenue from reverse supply chain management and environmental-related services, the company’s top line nearly tripled to HK$2.46 billion ($316 million) in its latest fiscal year. It also posted a profit of HK$61.03 million for the year. That said, the limited profitability of environmental projects caused Greenwise’s gross margin to tumble by 3.8 percentage points to 8% last year.

Switching lanes again

Dissatisfied with such razor-thin margins, Kwok turned his sights to the AI frenzy of the past few years, determining that infrastructure providers were set to benefit from the technology’s rise. As a result, in late June he suddenly announced a HK$2.2 billion acquisition of Shanghai Yovole Cloud Calculation — a firm specializing in cloud computing, data centers, and AI computing services, firmly staking a claim in the AI computing infrastructure realm.

Yovole Cloud’s most valuable assets are its licenses for cloud computing services, along with the credentials required to procure high-performance GPUs that form the backbone of high-powered computing needed for AI.

Currently, Envision Greenwise can supply about 1.5 MW of computing power to its clients. It aims to ramp that up to 16 MW in the near term, with a goal of getting 40% of its revenue from intelligent computing services by March next year. To achieve that, the company spent 1.29 billion yuan ($193 million) on Aug. 6 to purchase around 400 servers.

But such purchases require financial firepower. To address that, the company launched a placement of 118 million new shares, accounting for 3.92% of its expanded share capital, for HK$4.66 apiece on Aug. 1, raising roughly HK$550 million. Concurrently, it issued nearly $70 million worth of convertible bonds. All told, this fundraising campaign pulled in nearly HK$1.1 billion.

Uncertain horizon

Envision Greenwise’s cross-sector metamorphosis looks fraught with risk. The company lacks expertise in AI, and Kwok’s professional background hardly lies in AI technology. His ability to manage and steer the company’s development post-acquisition remains a major question mark.

The company’s frequent pivots also raise the question of how long it will remain focused on AI, after only entering the environmental sector for three years before making this major shift. The reality is that Envision Greenwise is itself quite green in the AI computing market. Even if it can scale its capacity to its targeted 16 MW, challenging more established players will require substantially more legwork.

Complicating matters, the company’s latest direction will demand heavy capital investment. Envision Greenwise held a mere HK$230 million in cash at the end of March, though it’s shown it’s capable of raising new funds with the August share placement and bond issue. But it’s hardly clear if investors will want to continue showering this AI newbie with new funds.

Despite all that, Envision Greenwise’s stock initially went on a tear in May as investors gobbled up the new AI theme, more than doubling from the HK$3 mark to HK$6.42 just a month later. But the shares plummeted after the acquisition announcement and have remained volatile since, now hovering above HK$4. That shows that shares of this type of “chameleon company,” whose business is perpetually in flux, have probably become the plaything of short-term traders looking for fast profits on each new headline. That’s hardly consolation for anyone who may be thinking of long-term investment.

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