Monday, March 1, 2021
 
Columnist
Martin Hennecke
 
WATER INDUSTRY
HKEx Stock Code : 01129 
 
Corporate Profile
The principal activities are: (i) provision of water supply (ii) sewage treatment and (iii) construction of water supply and sewage treatment infrastructure.

Business Review - For the year ended December 31, 2012

Water supply business

Group's water supply business consisted of 6 water supply plants which are located in Jiangxi Province, Auhui Province, Shandong Province and Hainan Province. The total daily water supply capacities were approximately 1,960,000 tonnes contributing revenue of HK$118.90 million, representing 36.26% of the Group's total revenue. The price of water supply ranged from HK$1.55 to HK$2.36 per tonne.

Sewage treatment business

Sewage treatment business consisted of 3 sewage treatment plants which are located in Jiangxi Province, Shandong Province and Foshan City, Guangdong Province. The daily disposal sewage capacities were approximately 130,000 tonnes per day contributing revenue of HK$38 million, representing 11.59% of the Group's total revenue. The price of sewage treatment ranged from HK$0.68 to HK$1.60 per tonne. The new sewage treatment plant located in Gaoming, Foshan City, Guangdong Province, the PRC contributed revenue of HK$8.77 million and gross profit HK$6.07 million to the Group for the year under review.

Construction of water supply and sewage treatment infrastructure

Construction service comprised water meter installation, construction of pipelines and pipelines repairing. This was the Group's major source of revenue contributing HK$170.98 million during the year, representing 52.15% of the Group's total revenue.

Business Outlook - For the year ended December 31, 2012

In 2013, the Company will officially expand into the solid waste processing industry and be engaged in the waste power generation business. Waster power generation is beneficial to both the nation and its people and accordingly receives great support from the PRC government. Not only can we enjoy the power grid subsidy for clean energy from the PRC government, we can also sell our carbon credits to the European Union. Accordingly, our waster power generation segment may be a new profit growth point for the Company.

Our three-year growth plans formulated by our new management at the end of 2011 are:

2012 Restructuring and consolidation to strengthen management and maintain profitability

2013 Expansion in terms of size and reach to increase effectiveness and maintain growth

2014 Innovation and synergy for brand building and sustainability

In 2012, we successfully accomplished our stated objectives and solved a lot of issues to improve the Group's management system and achieve a business turnaround. In 2013, our objective is to maintain profitability and achieve considerable growth. To us, the year 2013 is a year of investment. We have to invest in a number of new sizable water companies and waste power generation companies to expand our current operation scale.

As our subsidiaries have not adjusted water prices for many years, our water supply companies will expect to raise water prices in 2013. Given the fixed costs of water supply, there will be an increase in profits directly after the raise in water prices. Accordingly, profitability from water supply companies is expected to increase in 2013.

After more than a year's restructuring, the Board has decided to remain its focus on investing in water affairs (city water supply and sewage treatment and water reuse) for future development. We will actively explore our new business in the solid waste industry (being waste power generation and sludge processing). Given the BOT operating model of the industry, it has very promising prospects.

The scarcity in water resources and people's higher demands for environmental protection both present new opportunities for our future development. Our future development is also driven by the PRC government's stringent water resources management policies and its strong support for clean energy. Accordingly, we have strong confidence in the future growth of our Company.

Source: China Water Industry (01129) Annual Results Announcement
Chairman Wang De Yin Issued Capital (shares) 1,110M
Par Value HKD 0.5 Market Capitalisation (HKD) 1,477M
 
Login
Password
Register  Forget Password
Advanced Search
© 2021 The Standard, The Standard Newspapers Publishing Ltd.
Home | Business | Metro | Focus | Opinion | Markets | World | Sports | Entertainment | Monday Money | Property | Macau | Weekend