CIMB-GK analyst Roy Chen, Maybank Kim Eng analyst Wei Bin, Shares Investment reporter Louis Lee and NextInsight were in Shandong to check out China Everbright Group's wastewater treatment facilities as well as its waste-to-emergy plant last week.
China Everbright Group's waste to energy plant (pictured above, a China Everbright International subsidiary that is not under the Singapore listed entity) is a showcase of the parent Group's technological capability
Photos by Sim Kih
AT CHINA EVERBRIGHT WATER'S facility in the Shandong provincial capital of Jinan, CEO Wang Tianyi shared the Group's expansion plans with analysts and media from Singapore.
'Public-Private Partnership (PPP) project financing schemes incorporate the principle of addressing operational efficiency, fair distribution of risk and maximisation of public benefit to the different stakeholders,' said China Everbright Water CEO Wang Tianyi.
"Shandong is a huge province with a population 100 million. We intend to further develop our network of assets in this province," said Dr Wang.
Expansion is important
The government’s policy to raise national standards of wastewater discharge is changing the industry landscape.
Many small players are struggling to meet the increasingly stiff requirements, which translate into high capital expenditure and higher cost of operations.
Those with cheap facilties and low operating cost will not be able to comply with the new discharge standards, and will have difficulty surviving because they will not break even if they upgrade their facilities.
This development has created opportunities for the Group to acquire smaller wastewater treatment players at bargain prices.
The stock price of SIIC Environment, the Singapore-listed subsidiary of Shanghai Industrial Holdings, has leapt 10% since last Monday when it announced an agreement to pay Rmb 1.5 billion to acquire a 92% interest in Chinese developer Fudan Water, including the defeasance of debt.
Founded by the famed Fudan University in Shanghai, Fudan Water has a planned capacity of over a million tons a day, with about 10 wastewater treatment projects in Shanghai, Jiangsu, Zhejiang and Guangdong.
Dr Wang expects the water treatment industry to heat up this year with a significant number of M&As of players with capacity of 300,000 to 500,000 cubic meters a day.
In comparison, the Group's total wastewater treatment capacity is currently 2.4 million cubic meters a day, with another 942,500 cubic meters under construction or in preparation for operation.
The Group has 32 wastewater treatment projects, 4 reusable water projects and 2 heat pump projects after merging with Hankore.
Dr Wang is expecting an industry consolidation characterised by the dominance of large players.
He is also expecting the government to announce a whitelist of the companies that it intends to support.
