10 Questions for H2G Green

Company Overview

H2G Green Limited is dedicated to leading the transition to green energy. The Group owns more than 50% of Green Energy Investment Holding (GELH) and GasHub United Utility (GasHub). GEIH is a leading player in converting waste into green hydrogen, advanced biofuel, and synthetic graphite (biochar). GasHub is the first and sole distributor of LNG in cylinders in Singapore, with a focus on helping energy consumers reduce their carbon dioxide (CO2) emissions and utility costs. H2G Green aims to be a game-changing green energy enabler in the region and is committed to innovating methods and patenting its work with clean fuels and technology to help Singapore achieve its net-zero emission target.

1. Could You Elaborate on the Products or Services That H2G Green Provides for Its Clients.

• H2G Green’s Business Comprises of Two Segments:
  • Sustainability – H2G Green offers clean energy and advanced material options for consumers to achieve net-zero ambition through its subsidiaries. GEIH utilises innovative technology to convert waste into Green Hydrogen, advanced biofuels, and synthetic graphite. GasHub supplies Liquefied Natural Gas (LNG) to industrial end-users with advanced technology designed to reduce CO2 emissions or achieve net-zero emissions. By replacing traditional power grids, diesel, Liquefied Petroleum Gas (LPG), and town gas, H2G Green's solutions help to reduce utility bills and promote sustainable energy use.
  • Lifestyle – The Group's subsidiary P5 Pte Ltd (P5) provides luxury home products that are ethically and sustainably sourced. These include contemporary designer furniture and décor, modern and sophisticated lighting, wall coverings, and home accessories. These products offer consumers, who value environmental responsibility and ethical sourcing in their purchasing decisions, with sustainable options.

2. The Group Recently Pivoted to New Business Segments, What Can Shareholders Expect?

• Despite currently operating in two business segments, H2G Green is committed to unlocking additional income streams and enhancing shareholder value in response to the growing demand for sustainable investments. As a result, the Group made the strategic decision to pivot towards the Sustainability segment and has made acquisitions to expand its revenue streams and set a foundation for future growth in renewable energy and natural gas.

• The acquisition of GEIH has enabled H2G Green to leverage its strengths and create opportunities in renewable energy. The acquisition of GasHub also provides H2G Green with recurring revenue streams and a platform to venture into the growing energy and natural gas-related business on a domestic and international scale.

• With these strategic acquisitions, the Group is well-positioned to take advantage of emerging opportunities in the sustainable energy and lifestyle sectors and is poised for continued growth in the years to come.

3. What Are Plans for the Lifestyle Segment of the Group?

• As part of its strategic focus to broaden revenue streams and prioritize sustainable business operations, H2G Green plans to gradually reduce the operations of its Lifestyle segment in the future. While the Lifestyle segment has been successful in generating revenue and is currently profitable, the Group recognises the potential of the Sustainability segment to provide a more stable and predictable revenue stream.

• Compared to the Lifestyle segment, the Sustainability segment provides a more reliable and recurring revenue stream, with stronger profitability. Consequently, the Group aims to expand operations in the Sustainability segment to optimize financial performance and long-term growth potential.

4. Describe H2G Green’s Recent Financial Performance.

• H2G Green reported a year-on-year increase of 157% in revenue for the first half of 2023. Revenue rose from S$2.5 million* in 1H2022 to S$7.0 million in 1H2023, with the surge in demand for furniture, fittings, and home accessories being a significant contributor to this growth. Notably, the Lifestyle segment of the Group saw a remarkable revenue increase of S$3.8 million in 1H2023, rising from S$2.4 million in 1H2022 to S$6.2 million in 1H2023. This increase can be attributed to the post-pandemic demand and the easing of supply chain bottlenecks in 1H2023, with customers being more conscious about sustainable living environments. The Group's reliance on mostly imported European brands that are very strict with sustainable materials or certified with sustainable quality materials has further enhanced its credibility in this area. In addition, the Lifestyle segment is building up good business portfolios with hospitality, turnkey developers, and commercial projects, and has opportunities to participate in prestigious and luxury projects such as Park Nova, Nassim, and Shenton 8 Way in Singapore. These positive developmentsindicate a strong upward trajectory for the Lifestyle segment for FY2023.

• Despite the significant growth in revenue, the Group faced higher operating and selling costs, resulting in an adjusted loss of S$0.4 million in 1H2023. It is worth noting that this figure excludes a one-off expense from the acquisition of GasHub. While the revenue growth is a positive sign, the Group will continue to manage its costs to ensure sustained profitability in the future. The Group will also address the rising costs and identify opportunities to optimize its operations, such as streamlining its supply chain and finding cost-efficient alternatives.

5. Could You Elaborate on the Future Direction for H2G Green’s Business Segments?

• In response to growing demand for sustainable and cleaner sources of energy, H2G Green plans to prioritise its Sustainability segment in the future. The Group has invested heavily in becoming a solutions provider for sustainable agricultural waste management and developing partnerships to pursue renewable energy alternatives. H2G Green has a unique position in the market due to its patents certificates for cryogenic storage systems, gas recovery systems, and manifold assembly, as well as various patent-pending certificates.

• While H2G Green will continue projects in the Lifestyle segment, it plans to place more emphasis on its Sustainability segment in the near term. The Group aims to position itself as a leader in the sustainable energy industry and is committed to providing innovative solutions for its clients. By leveraging its capabilities in sustainable waste management and renewable energy alternatives, H2G Green aims to capture a growing market trend towards sustainability in the energy industry.

6. What Are the Growth Opportunities for H2G Green Over the Next Few Years?

• H2G Green is well-positioned to capitalise on the opportunities presented by Singapore's commitments under the United Nation’s 2030 Sustainable Development Agenda and the Paris Agreement, as well as the country's long-term goal of achieving net-zero emissions by 2050. This goal is in line with the International Renewable Energy Agency (IRENA), which is supported by 167 countries and the European Union.

• As corporations and industrial companies face mounting pressure to address their environmental impact, H2G Green offers a suite of solutions through the supply of cleaner to clean fuel and renewable energy sources such as LNG, CO2 capture, advanced biofuel, synthetic graphite (biochar) with carbon credit, and green hydrogen. These solutions align with the trend towards decarbonisation and a shift towards sustainable and circular business models. H2G Green’s expertise in the sustainable energy sector puts the Group in a strong position to capitalise on this trend.

7. What Are the Drivers or Trends in the Business Segments That the Group Operates In?

• There has been a clear shift towards sustainable sources of energy, with more companies opting for energy sources that produce fewer carbon emissions, no carbon emissions or other harmful by-products. While LNG has fewer carbon emissions than diesel, coal, gasoline, butane or LPG, it is still sourced from refining fossil fuels. Therefore, the Group is taping on its patented technology to carbon capture and re-use CO2 into other products such as Bio LNG and LNG with carbon offset, which are obtained sustainably, to operate as a net-zero carbon organisation. Moreover, as fuel prices remain high, businesses are looking for cost-efficient solutions. In comparison to diesel, LNG has c.10% improvement on combustion efficiency, providing cost savings for industrial businesses with the added benefit of lower emissions.

• There has also been a growing focus on sustainable agriculture and horticulture waste management. H2G Green facilitates the sustainable disposal and processing of waste into products like green hydrogen for the chemical industry and power plants, synthetic graphite for advanced materials, and advanced biofuels for aviation, marine, and transportation.

• Furthermore, H2G Green’s Lifestyle business places a strong emphasis on ethically and sustainably sourced materials for their product offerings. This aligns with the wider trend of companies and consumers prioritising sustainability and ethical practices in their operations and purchasing decisions.

8. Are there any plans to integrate the Sustainability and Lifestyle business segments to grow revenue and extend H2G Green’s geographical reach?

• While the Lifestyle and Sustainability segments of H2G Green cannot be integrated, there is synergy within the Sustainability segment through GasHub and GEIH. GasHub supplies LNG to GEIH's waste processing plants, which reduces operating costs and maximises overall profits for the Group.

• H2G Green's business operations are primarily concentrated in Singapore. However, the Group is open to exploring expansion opportunities in Malaysia, Indonesia and Philippines , as long as they are aligned with the Group's strategic objectives and commitment to sustainable practices.

9. Could you share some of the key ESG factors that are material to H2G Green and how are you addressing them?

• H2G Green is making a two-fold effort to support the transition to sustainable energy consumption and horticulture and agricultural waste management:

• First, the Group’s operations involve processing biomass or horticulture and agricultural waste to produce like green hydrogen, advanced biofuel, wastewater to wood vinegar, and synthetic graphite (biochar), all of which are valuable commodities for various industries. This process not only produces renewable energy but also addresses waste management concerns. Moreover, it is carbon negative, meaning that it removes carbon from nature waste and convert it into solid carbon that is embedded in the ground for hundreds of years.

• Second, H2G Green uses LNG as a greener, cleaner fuel source compared to coal, diesel, gasoline, and LPG. LNG fuel produces 40% less carbon dioxide than coal and 30% less than oil, making it one of the cleanest fossil fuels available. Additionally, it does not emit soot, dust, or particulates and generates insignificant amounts of harmful compounds.

10. Why Should Investors Take a Closer Look at H2G Green?

• H2G Green's strong focus on sustainability is its key value proposition to shareholders, as the sustainability industry is rapidly growing and there is substantial potential for growth. The Group’s revenue growth from S$0.1 million in 1H2022 to S$0.56 million in 1H2023 demonstrates its success in this field.

• H2G Green's current and pending patents also indicate significant room for expansion in the sustainability industry. Furthermore, the acquisition of GasHub and the establishment of Southeast Asia’s first operational LNG bottling facility highlights the Group’s commitment to sustainable energy and provides significant potential for growth in the energy segment.

• However, it is worth noting that 89.6% of H2G Green's revenue in 1H2023 was contributed by the Lifestyle segment, which may cause some investors to overlook the potential for growth in the energy segment. Nonetheless, it is important to recognise the potential for growth in the Sustainability segment of H2G Green.

10 in 10 – 10 Questions in 10 Minutes With SGX-listed Companies

Designed to be a short read, 10 in 10 provides insights into SGX-listed companies through a series of 10 Q&As with management. Through these Q&As, management will discuss current business objectives, key revenue drivers as well as the industry landscape. Expect to find wide-ranging topics that go beyond usual company financials.

This report contains factual commentary from the company’s management and is based on publicly announced information from the company.

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For more company information, visit www.h2g.green Click here for H2G Green’s Investor Presentation February 2023.