AN INTERESTING document dropped in my lap yesterday, interesting because it raises questions about just what the Environmental Protection Department (EPD) is up to in the campaign to cut smoky diesel engines in Hong Kong.
The document is a report from Celestial Research on Eco-Tek Holdings, a company that was listed on the stock exchange's trivial pursuits board late last year. Eco-Tek makes particulate matter traps that reduce exhaust emissions from light diesel engines and the company now has an 80 per cent market share for these devices in the SAR.
The curious item in all this is that in the nine months to July last year Eco-Tek made gross profits of HK$12.65 million on turnover of HK$16.9 million. That amounts to a gross profit margin of 74.8 per cent. Haul out your calculator and work it out yourself, an absolute windfall for this little company.
This is curious because vehicle emission control is getting to be a big industry around the world and an increasingly competitive one too, with fortunes in research money thrown at it. How is it in this sort of environment that the EPD could find only two suitable manufacturers, one of them an also-ran from the start and the other a small company that did not even exist three years ago but has walked away with 80 per cent of the market and registered a 74.8 per cent profit margin too?
Must have been a dynamite breakthrough in technology that Eco-Tek managed to obtain here from the Polytechnic University, right up there with Thomas Alva Edison and the light bulb. Just think of it. The only suitable competing model costs HK$4,000 to HK$7,500, while Eco-Tek's retails for only HK$1,300 and is not that the exact figure for the Government's subsidy per installation?
What a marvel and then a 74.8 per cent profit margin too. Yeah, you tell me.
It is all the more curious because one of the members of a Legco sub-committee on smoky vehicles, Ip Kwok-him, said at a meeting in November that the transport industry suspected the administration of being reluctant to approve installation of new models of particulate traps, although some had proven to be more effective. His sentiments were shared by another member, Law Chi-kwong, but the only response they got from the EPD representative at the meeting, Tse Chin-wan, was that suppliers not on the approved list are welcome to contact the administration to arrange a test on the suitability of their products.