Cypark: Warning signs

There are quite some positive evaluations on Cypark - a renewable energy company. It has all the "Buy" calls from investment research firms, blogs etc. I do not claim that I know the business well enough to make a call. However just would like to highlight on how they make their claims, billings etc.

Let me highlight where I do find worrying:

1. it has all the politically linked people in the organization - good that it gets projects, but BAD that will it deliver? This delivery issue will be magnified from the 2nd point below if it is not good at it.
2. receivables - let me highlight this based on the Balance Sheet.

Revenue of about RM160 million to RM175 million over last 2 years but receivables of more than RM232 million and growing...

On the receivables, it has passed through Ernst and Young - the auditor (Big 4). Now, let me highlight another part which I have picked up. It says below, "Revenue recognition - There are circumstances where revenue is recognised based on work performed but yet to be certified by customers, which are commonly encountered in the final claim submitted upon the completion of the entire project. Hmmm...I wonder how does the company know how much to bill when the customers has yet to acknowledge the completion of the work? There is no invoice yet as it seems from what I read. (I know to a certain extent based on contract, but still it is yet to be acknowledged.)

Cypark has huge unbilled revenue - RM194.4 million as at Financial Year 2011 - more than its entire year's revenue for the same year.

Another thing, it is not that the company has low debt. It is burdened with debt of RM169 million - ya, you can say that it is a high capex business hence the investments are needed. True.

But can someone explain on the unbilled revenue and high trade receivables - which until now is growing. I can't claim I know this well - but it is good to follow the progress in future.